NAR Generational Trends Study Shows Confidence in Market, Some Challenges

Young home buyers remain optimistic and see their home as a good investment, while older buyers are more likely to trade down to a smaller property to match changing lifestyles, according to the 2014 National Association of Realtors® Home Buyer and Seller Generational Trends study, which evaluates the generational differences of recent home buyers and sellers.

Eight out of 10 recent buyers considered their home purchase a good financial investment, ranging from 87 percent for buyers age 33 and younger, to 74 percent for buyers 68 and older.

Lawrence Yun, NAR chief economist, said the Millennial generation, which is under the age of 34, is now entering the peak period in which people typically buy a first home. “Given that Millennials are the largest generation in history after the baby boomers, it means there is a potential for strong underlying demand. Moreover, their aspiration and the long-term investment aspect to owning a home remain solid among young people,” he said.  “However, the challenges of tight credit, limited inventory, eroding affordability and high debt loads have limited the capacity of young people to own.”

Twelve percent of all recent buyers had delayed their home purchase due to outstanding debt. Of the 20 percent of Millennial buyers who took longer to save for a downpayment, 56 percent cited student loan debt as the biggest obstacle. Fifteen percent of buyers aged 34 to 48 had delayed buying, with 35 percent citing student debt and 46 percent citing credit card debt.

Even with the market frictions, the study found that the largest group of recent buyers was the Millennials, sometimes called Generation Y or Generation Next, those born between 1980 and 1995, who comprised 31 percent of recent purchases; followed closely by Generation X , those born between 1965 and 1979, at 30 percent.

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