The National Association of
Realtors (NAR) recently released
the results of its annual Home Buyer and Seller Generational Trends Survey, which
looks at buying and selling patterns among the various age cohorts. This year’s
findings were based on just under 5,500 responses from recent home purchasers
and sellers. Jessica Lautz, NAR’s managing
director of survey research and communications, spoke with Scotsman Guide News about why the
findings bode well for the housing market.
What does the survey data say about generational buying
We do see that millennials are the largest generation of
homebuyers for the fourth consecutive year, but they are also the largest
generation. We did find — and what I think is exciting about this
year — is that Gen Xers, the generation above millennials and born between
1965 and 1979, have actually come back. They are at 28 percent of primary
residence buyers this year, and that is the highest since 2014.
As I understood it, many Generation Xers were locked into their
first homes after the housing market crashed and couldn’t sell. Is
They were. We did find that more than one in five of them
wanted to sell earlier, but they couldn’t because they were underwater in their
previous property. They likely purchased their first home at the height of the
housing market and would have quickly lost equity in their home purchase. We
did find also that 14 percent of Gen X buyers had a distressed sale in the
past, so a short sale or a foreclosure, and are coming back from that.
This must be good news for the supply of homes for sale,
which has been a problem.
It could be, absolutely. There is so much demand, though,
especially if the millennials do age into the homebuying population. The oldest
millennials are in the homebuying sector. They are 36 or older, but the
largest [cohort] of millennials is 26 years old. As they start to age into
homebuying, we would expect that demand is only going to grow.
How many years will it take before the millennials jump into
the market in full force?
Well, they have been the largest share for four years, but
the demand is there. They want to be homeowners, from all the data that we have
been collecting. Whether they are renters or they live with mom and dad, they
do want to purchase a home in the future. It is just the availability of
housing stock, affordable housing, and getting over the hurdles, such as
student-loan debt and saving for a downpayment.
Your data suggests that many of the new homebuyers were saddled with student-loan debt, then?
It is a real problem. Among successful homebuyers, we
actually saw that 46 percent of millennials do have student-loan debt, but they
don’t have the highest amount. Gen Xers have the highest amount of student-loan
debt at $30,000. Gen Xers would be 37 to
51 when this survey was conducted. Perhaps they have graduate-school loans or
re-educated themselves during the recession for another career, and then took on
additional debt. It is a debt that is not forgivable in bankruptcy. You can’t
get rid of it. You just have to keep chipping away at it.
What are some other problems that are preventing people from
Affordability is a big constraint. We just released last
month an aspiring-buyers profile, and we looked at those who are renters. We
did find that they do want to own, but they believe that affordability is a big
constraint pulling them back. We also noticed that there is a misconception
about downpayments — 87 percent believe that you need more than 10 percent
down for a downpayment, but there are low-downpayment programs available to
first-time homebuyers out there.
Overall, though, it would seem that NAR’s survey findings bode well for housing sales.
We are seeing that when people purchase homes,
especially young buyers, that they believe their purchase is a good financial
investment. They are purchasing for that pure psychological desire to own a
home on their own. So, these are very good things in the housing market. And seeing Gen Xers come back from distressed
sales, that is such a strong statement about how people envision housing and
believe in homeownership is positive for their future.