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Gen Xers have come back to the housing market

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 patterns?

LautzWe 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 that right?

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 buying homes?

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.  


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