One in six Gen Xers are buying a home for all the family, new research suggests.
Gen Xers, born between 1965 and 1979, are purchasing multi-generational homes, overtaking younger boomers as the top buyers. So says the National Association of Realtors (NAR).
More than half (52%) did so because their adult children have either moved back or never left home. That is according to the 2019 Home Buyer and Seller Generational Trends study.
Older millennials who bought a multi-generational home (9%) were most likely to do so to care for aging parents (33%). Next, they did so to spend more time with them (30%).
NAR Chief Economist, Lawrence Yun, says, “The high cost of rent and lack of affordable housing inventory is sending adult children back to their parents’ homes either out of necessity or an attempt to save money.
“While these multi-generational homes may not be what a majority of Americans expect out of homeownership, this method allows younger potential buyers the opportunity to gain their financial footing and transition into homeownership. In fact, younger millennials are the most likely to move directly out of their parents’ homes into homeownership, circumventing renting altogether.”
Millennials account for 37% of all buyers, making them the most active generation of buyers for the sixth consecutive year. This year, the report separated older millennials (26%) and younger millennials (11%).
Gen-Xers buying a home for all the family
Gen X buyers were the second largest group of buyers (24%), followed by younger boomers (18%) and older boomers (14%).
Dividing millennials into younger and older cohorts highlights the disparities between the two age groups. It also paints a picture of older millennials that is much closer to Gen Xers and younger boomers.
Older millennials have a median household income of $101,200 and purchase homes with a median price of $274,000. This compares to Gen Xers ($111,100 income, $277,800 median home price) and younger boomers ($102,300, $251,100).
This is to be expected as millennials continue to age, says Mr Yun. “Older millennials are now entering the prime earning stages of their careers, and the size and costs of homes they purchase reflect this. Their choices are falling more in line with their Gen X and boomer counterparts.”
Younger millennials are purchasing the least expensive homes and smallest homes ($177,000 and 1,600 square feet). This means they face the greatest challenge in finding affordable inventory. They also report a median household income of $71,200.
Downsizing to a smaller home is not currently common among any of the generations. Sellers over the age of 54 only downsize by a median of 100 to 200 square feet. Gen Xers and boomers interested in downsizing could have been hindered by a lack of smaller inventory. On the other hand, they may have been impeded by the increase in multi-generational living these generations are reporting to accommodate the needs of adult children and aging parents.
Downpayments from parents
Younger millennials were the most likely to say saving for a down payment was the most difficult task in the home process, at 26%. Among them, student loan debt delayed their home purchase (61 percent); however, they indicated that this particular debt only delayed them a median of two years − the shortest delay of all generations.
“These buyers are the most likely to receive some or all of their down payment as a gift from family or friends, usually their parents,” says Mr Yun. “This could explain why their debt is not holding them back from homeownership as long as other generations, who are less likely to receive down payment assistance.”
Singles make thier mark
While most buyers in all age groups are married couples, single buyers and unmarried couples continue to make a mark on the real estate market. Single females accounted for 25% of all younger boomers and silent generation buyers. “Many of these buyers are entering the market after a divorce, which is the case for younger boomers, or the death of a spouse in the case of those in the silent generation,” says Mr Yun.
The ages for the generations in the survey were: Younger millennials (ages 21-28); Older millennials (ages 29-38); Gen Xers (ages 39-53); Younger boomers (ages 54-63); Older boomers (ages 64-72); and the silent generation (ages 73-93).
NAR mailed a 129-question survey in July 2018 using a random sample weighted to be representative of sales on a geographic basis to 155,250 recent homebuyers. Respondents had the option to fill out the survey via hard copy or online; the online survey was available in English and Spanish. A total of 7,191 responses were received from primary residence buyers. After accounting for undeliverable questionnaires, the survey had an adjusted response rate of 5.6%.
The recent homebuyers had to have purchased a home between July 2017 and June 2018. All information is for the 12-month period ending in June 2018, apart from income data, which is for 2017.