Move over, millennials—boomers are back on top.
That might be the biggest takeaway from the latest demographic survey conducted by the National Association of REALTORS® (NAR), as for the first time in eight years, millennials did not make up the largest share of buyers over the last year, losing out to the baby boomers—now the generation that buys and sells the most homes.
“I am so used to saying millennials are the biggest generation purchasing homes, and they are not any longer,” says Dr. Jessica Lautz, deputy chief economist for NAR.
While many other data points in the annual “Home Buyers and Sellers Generational Trends Report” did not skew from historic norms, Lautz explains that this sudden flip in demographics between boomers and millennials came about through the confluence of a couple important factors that quickly upended years of dominance by the younger generation.
“We know that first-time homebuyers dropped to the lowest share that we have seen in 41 years of our history. So millennials tend to be first-time homebuyers, especially young millennials, and they are really struggling,” says Lautz. “Within the market, factors such as inventory and housing affordability—that’s certainly holding them back. And then factors outside of the market such as student loan debt or rising rent, it’s hard to save for a down payment.”
At the same time, boomers—much more likely to already be homeowners—benefited tremendously as home prices shot up over the last couple years. Lautz says a lot of these older folks used this boost to find their “perfect retirement property.”
“They have quite a bit of housing equity to make that housing trade right now,” she explains.
In terms of numbers, the shift was huge. In 2021, millennials made up 43% of buyers. Last year, that fell to 28%. The share of boomers rose 10% on both the buy and sell side—from 29% to 39% of buyers, and from 42% to 52% of sellers. Millennial sellers fell from 26% to 18%.
It is impossible to say exactly how persistent this new dynamic will be. The affordability and inventory issues that weigh heavily on younger, middle-income buyers do not have any quick fixes with a dearth of new construction—especially for entry-level homes. Home prices have also vastly outpaced earnings in most metro areas going back to 1980, according to the Harvard Joint Center for Housing Studies.
As far as the older generation, boomers have also consistently shown a greater desire to retire to a home compared to previous generations, meaning they could remain a presence on the buy side for some time.
Lautz says it was a surprise to see the torch passed from millennials to boomers this year, even though the underlying trends make sense. Millennials remain the largest generation in terms of population, having overtaken boomers in 2019, according to the U.S. Census Bureau.
In another demographic surprise, Gen Z nearly doubled their participation in the housing market last year, rising from 4% to 7% (combined, both buy and sell side, with Gen Z buyers making up 4% of the market). While there still isn’t a large enough sample of Gen Z housing market participants to begin breaking down all of their preferences and behaviors, Lautz says she is looking forward to learning more in the coming years.
“I think we’re just seeing the beginning of Gen Z entering the market—I think it’s exciting to see,” she says. “They do have very low household incomes that they’re purchasing on, and so they’re likely to rely on family support.”
That includes everything from direct financial contributions from family, to something less direct like sharing living spaces while saving for a down payment (14% of Gen Z buyers lived rent-free with friends and family to save).
Lautz says millennials didn’t necessarily have this, as they came of age during the Great Recession.
“That may have not just been available to (millennials),” Lautz notes.
Other takeaways
For the most part, this year’s report didn’t offer any other major surprises from previously measured trends. People are still moving much further on average (50 miles) and are less likely to buy or sell for jobs. All generations continue to utilize real estate agents at a high rate (86% of both buyers and sellers), and most home searches start online.
Being close to friends and family has remained a persistently strong reason for choosing home location or the choice to buy or sell, and showed up especially strong in the Gen Z cohort. Lautz calls that “semi-surprising,” as 30% of Gen Z buyers moved straight from a family member’s home into homeownership without renting (over 40% of millennials rented first).
Multi-generational homes are most common for boomer homeowners, and remain at their highest level historically at 14% overall.
“I do think it speaks to pooling money, but also the need for health and caretaking so everyone can be safe and supported,” Lautz says.
Another interesting data point—cash buyers continue to remain a large force in the market, at 22% overall and more than 50% of buyers age 68 and older. Lautz says it will be interesting to see if that trend persists, as interest rates continue to discourage some mortgage holders from moving.
Another thing to watch out for is just how quickly Gen Z will enter the market, after millennials struggled, buying homes later than previous generations.
“Having family support perhaps has allowed them into homeownership in a way that millennials couldn’t rely on as much,” says Lautz.
To view the full report, click here.
