While mortgage lenders are currently dealing with heavy demand, they need to prepare for a large generation of borrowers soon to come.
Generation Z — defined as those born between 1997 and 2012 — are on the precipice of the prime home-buying phase in their lives and will soon be flooding the marketplace. A 43% share of the demographic plan to purchase a home in the next five years, according to Realtor.com. That equates to about 28.9 million of the country’s 67.2 million people within the generation, based on data from the U.S. Census Bureau.
Another 44% — or 29.5 million Gen Zers — plan to buy a house in the next five to 10 years and the remaining 13% — 8.7 million — estimate waiting 10 years or more. Moreover, a 72% share said they’d prefer to buy a property instead of renting while 45% said they already started
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Millennials made up the biggest share of homebuyers, and members of Generation Z are entering the housing market in measurable numbers, according to the 2021 National Association of Realtors’ annual Home Buyers and Sellers Generational Trends Report.
The report revealed that millennials age 22 to 40 represented 37% of all buyers and have held the largest share among homebuyers every year since 2014. Millennials also were more likely to be first-time homebuyers than members of other age groups, according to the NAR report. Eighty-two percent of younger millennials age 22 to 30 and 48% of older millennials age 31 to 40 were first-time homebuyers last year. Twenty-eight percent of younger millennials chose to live with their parents, other family members or friends prior to entering the market as a strategy for building their savings.
Millennials homebuyers placed a premium on location, with 74% of those age 22 to 30 citing “convenience to workplace” as the most important reason for choosing a particular neighborhood and 65% of those buyers saying that the quality of the neighborhood influenced their purchase. Among older millennials age 31 to 40, 69% said that their purchase was influenced by the quality of the neighborhood. A majority (54%) of buyers age 31 to 40 bought homes in a subdivision or suburb.
Members of Generation Z age 19 to 21 comprised 2% of buyers and 2% of sellers, making them the smallest group measured. This was the first year the report featured these homebuyers. The sample size was too small for indicating unique characteristics, but it does demonstrate that this generation values home ownership.
Generation Xers age 41 to 55 constituted 24% of recent homebuyers. At 18%, they were the group most likely to buy a multigenerational home to share with other family members such as their parents, their adult siblings or their grown children.
Boston Real Estate and Baby Boomers
Thirty-two percent of homebuyers were baby boomers age 56 to 74 and 13% were members of the silent generation age 75 to 95. Older baby boomers age 66 to 74 and members of the silent generation valued living in neighborhoods that were close to where they shopped and preferred closeness and proximity to medical facilities. Forty-seven percent of those homebuyers cited proximity to friends and family as a factor in choosing a neighborhood.
Boston Real Estate Agents and Technology
Though the use of virtual tours rose dramatically due to the pandemic, buyers in all age categories continued to rely on agents. Eighty-eight percent of all homebuyers said they used an agent as a source of information during their search, and 91% of millennials age 22 to 30 said the same. Fifty-one percent of all buyers wanted an agent’s help in finding the right home to buy. Younger millennials and buyers age 66 and older were most likely to want an agent’s help with paperwork.
Boston Real Estate and the Bottom Line
The use of agents wasn’t limited to buyers. Nine in 10 home sellers worked with an agent to find buyers for their properties.