Leading Trend: Millennials Heading For The Burbs
Forget Big City Living...
Everybody knows the deal: Millennials want to be in the biggest cities, in the center of all the trendiness, all the job growth and generally speaking, all the action. Right?
Well, not so fast.
It turns out that millennial home buyers are increasingly moving to small towns, according to the 2018 Home Buyer and Seller Generational report from the National Association of Realtors®. About a fifth of those aged 37 and under, 21%, bought homes in a small town compared with 16% in the previous year, according to the report. That's compared with 15% who moved to urban areas, which has been the same for the past two years.
The report is based on responses from a total of 7,866 home buyers who purchased a property from July 2016 to June 2017. Millennials are defined as 37 years old and younger; members of Generation X are 38 to 52; younger baby boomers are 53 to 62; older boomers are 63 to 71; and members of the silent generation are 72 to 92.
“It’s a common myth that all millennials are living in urban centres," says Jessica Lautz, managing director of survey research at NAR. "The majority of millennials are buying in suburban areas, and there’s a large share who are purchasing in small towns. It costs less to purchase a home in those areas, and schools are becoming a priority for millennial parents.”
Enrolling their kids in good public schools without having to shell out big bucks for city private schools is important for many millennial buyers, says Jason Dorsey, president of the Centre for Generational Kinetics, a millennial and Generation Z research group based in Austin, TX. And, increasingly, their jobs are conducive to small-town living.
"They’re able to commute to where their work is located, or they’re able to work remotely," he says.
The younger generation made up the most buyers of any generation, at about 36%, according to the report. Nearly two-thirds are first-time buyers, roughly the same percentage of whom are married couples. Nearly half, 47%, have children.
“Millennials are getting older and having more stable relationships," Dorsey says. "Planning to have kids is a catalyst for wanting to buy a home.”
Members of Generation X scooped up about 26% of homes on the market. They're the most likely to be married and have kids under 18. And with the highest median household incomes of any generation, $104,700, they're buying the most expensive and biggest homes.
Younger baby boomers scooped up 18% of homes, while older boomers nabbed about 14%.The silent generation purchased only 6%.
“People buy homes to accommodate their lives," says Chief Economist Danielle Hale of Realtor.com®. "So life factors like getting married, having kids, having the kids move out of their houses ... are driving a lot of the home-buying and -selling behaviour."
Know the competition: Who's buying homes anyway?
So who are these hordes of home buyers swamping the market, submitting offers over asking, and engaging in bidding wars?
Overall, about two-thirds of recent buyers were married, 18% were single women, 8% were unmarried couples, and 7% were bachelors. Thirty-seven percent had children under 18 living at home.
About 34% of recent purchasers were first-time buyers, down just 1 percentage point from last year.
What kinds of homes are people shelling out for?
Choosing the right home is more important than ever to buyers. It had better be—they plan to live in their abodes for a median 15 years. (An additional 18% swore they're never moving.) Millennials are more likely to stay in their homes for only 10 years, while younger boomers expect to stay put for about 20 years.
Buyers overwhelmingly purchased existing (previously lived in) houses. Those places accounted for 85% of sales compared with 15% for newly constructed homes. Millennials, who make less, were less likely than younger boomers to buy new homes.
Those shopping for homes also preferred the detached, single-family kind. These houses made up 83% of all sales. The silent generation was the only group of buyers to buy higher numbers of generally lower-cost—and lower maintenance—condos and townhomes.
"If they're looking to buy in the suburbs, the inventory of homes is overwhelmingly single-family," says Hale. "People generally prefer to not be able to hear their neighbours next door."
The typical home had three bedrooms and two bathrooms and spanned 1,870 square feet. It was a median 27 years old. Younger buyers tended to buy older homes, which usually cost less.
Who's selling their homes?
So in this topsy-turvy market of soaring prices and rising mortgage rates, why are sellers plunking down a "For Sale" sign in their front yards? Their top reasons: They needed more space; they wanted to be closer to family and friends; or they needed to move for work.
Their homes were on the market for a median of three weeks and fetched 99% of their asking prices. That was a median $47,500 more than they originally paid for their abodes, which they generally lived in for a decade.
Gen Xers were the most likely to put their homes on the market, making up 26% of home sellers. They typically moved up into larger homes, often to accommodate growing families or their parents moving in with them.
Younger boomers made up 23% of home sellers, but they tended to stay in roughly the same-size homes. Those 63 and up tended to downsize.
The majority of sellers didn't move too far from their previous homes. Nearly three-quarters stayed within the state.
Source: Clare Trapasso With Realtor.com