Despite steep housing prices and rising mortgage rates, millennials are increasingly becoming homeowners, defying economic challenges. According to the National Association of Realtors®, 2024 Home Buyers and Sellers Generational Trends report, millennials were 38% of all home buyers last year. It marks a notable increase from 28% the previous year. Furthermore, 32% of buyers last year were purchasing their first home, up from 26% the prior year.
This post will take a closer look at the rising rates of millennial homeownership.
Millennial Homeownership Trends
Varying Millennial Subsets
Jessica Lautz, the Deputy Chief Economist at the NAR, highlights a split in homeownership trends within the millennial generation. Older and younger subsets of millennials are exhibiting different buying behaviors. Older millennials, with accrued housing equity, are often repeat buyers. On the other hand, younger ones typically rely on family support to buy homes.
This shift occurs despite a backdrop of low housing inventory and mortgage rates that continue to escalate costs. In late March, mortgage rates averaged 6.79% for a 30-year fixed loan. The median home list price reached $415,500 in February. Despite these obstacles, 17% of younger millennials (25 to 33) and 21% of older millennials (34 to 43) purchased homes. These groups had median incomes of $106,000 and $127,700 respectively.
Overcoming Challenging Conditions
Danielle Hale, Chief Economist at Realtor.com®, notes that rising interest rates initially dampened millennial homeownership plans. However, recent data suggests a robust rebound, underlining this generation’s persistent pursuit of homeownership. Indeed, more than half of the younger millennials felt that buying a home was the right move at the time. They made this decision despite the challenging market conditions.
Shifts Among Other Buyers
The pullback of investors from the market, especially those competing for more affordable homes, has opened opportunities for millennials. A strategic retreat by baby boomers, who previously dominated the market, also contributed to this shift. This demographic shift has moved a significant portion of millennials to enter the homeownership realm.
Interestingly, the trend extends beyond buying patterns. Baby boomers, traditionally holding the largest share of the housing market, are now selling their homes in greater numbers. They currently comprise 45% of sellers. On the other hand, nearly a third of Generation Z home buyers are single women. This trend reflects a diverse and changing landscape of homeownership.
The American dream of homeownership remains strong among millennials. Their view of housing as a wise financial investment is another draw. Notably, 86% of younger millennials endorse this view. Despite the barriers, millennials’ determination to own homes is evident, driven by economic and personal motivations.
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