In a surprising turn of events, baby boomers have reclaimed their position as the dominant force in the U.S. housing market, surpassing millennials in home purchases. According to a recent report by the National Association of Realtors (NAR), baby boomers accounted for a staggering 42% of all homebuyers in the past year, while millennials made up only 29%. This marks a significant shift from the previous year, where millennials represented 38% of buyers compared to baby boomers at 31%.
The Generational Shift in Home Buying
The data reveals a stark contrast in the home-buying landscape, particularly as millennials enter their prime homebuying years. Despite being the largest generational cohort in the U.S., millennials are facing significant barriers to homeownership. Factors such as low inventory, soaring mortgage rates, and record-high home prices have made it increasingly difficult for younger buyers to enter the market.
The report also highlights a troubling trend: the share of first-time homebuyers has dropped to 24%, down from 32% the previous year. This decline underscores the growing affordability crisis that is pushing younger generations out of the housing market.
The Impact of Mortgage Rates and Cash Purchases
Elevated mortgage rates have played a crucial role in slowing home sales across the board. However, older buyers, particularly baby boomers, have been less affected by these changes. Many baby boomers are opting to purchase homes outright with cash, bypassing the need for financing altogether. Jessica Lautz, NAR’s deputy chief economist, noted that half of older boomers (ages 70-78) and two out of five younger boomers (ages 60-69) are making cash purchases. In stark contrast, over 90% of buyers aged 44 and younger are financing their home purchases, highlighting the financial disparities between generations.
The Role of Family Support
Millennials are increasingly relying on family support to secure their down payments. The NAR report indicates that 27% of younger millennials (ages 26 to 34) and 13% of older millennials (ages 35 to 44) cited gifts from relatives or friends as a source for their down payments. This reliance on family assistance reflects the financial challenges faced by younger buyers in today’s market.
Baby Boomers as Sellers and Buyers
Interestingly, baby boomers are not only the largest group of homebuyers but also the largest group of sellers, comprising 53% of the market. This trend is somewhat encouraging, as empty-nest baby boomers own nearly 30% of large U.S. homes—twice as many as millennials with children. Nearly 30% of baby boomers in the NAR report indicated that their primary reason for buying a new home was the desire to downsize, suggesting a potential increase in housing supply as older homeowners look to sell their larger properties.
The “Silver Tsunami” and Housing Supply
Experts have speculated that a “silver tsunami” could significantly impact the housing market as a wave of older homeowners begins to downsize. Some analysts are optimistic that this trend could boost the supply of homes available for younger buyers. However, others remain skeptical, pointing out that the supply and demand dynamics do not align evenly across different regions.
A Growing Generational Divide
The findings from the NAR report highlight a growing generational divide in the housing market. Younger Americans are struggling to afford homes that seemed far more accessible to their parents. Data from the Federal Reserve reveals that baby boomers owned approximately 51% of all household wealth at the end of 2024, while millennials accounted for only about 10%. This disparity in wealth ownership further complicates the challenges faced by younger generations in achieving homeownership.
Conclusion
The NAR’s latest generational trends report, based on survey responses from over 5,390 homebuyers who purchased a primary residence between July 2023 and June 2024, paints a complex picture of the current housing market. As baby boomers continue to dominate home purchases, millennials are left grappling with affordability issues and limited options. The evolving landscape of homeownership underscores the need for solutions that address the challenges faced by younger buyers while recognizing the significant role that older generations play in shaping the market.
As we move forward, it will be crucial to monitor these trends and their implications for the future of homeownership in America.
English 