Real Estate Trends 2023: Who’s buying homes? The NAR knows!
In 2013, the National Association of Realtors® (NAR) started producing an annual report on buying and selling trends across generations. It’s full of good information, but it’s also 130-plus pages long. We’re sharing highlights from the 2023 report to save you from the search. (If you want to read the full report, the link is at the end of this article.)
Trend shift alert: Baby Boomers buy more homes than Millennials
For the first time since the 2014 report, Millennials (age 24-42) weren’t the largest group buying homes. Baby Boomers took over that spot in the 2023 report, with a 39% share. This breaks out into 23% Younger Boomers (58 to 67 years old) and 16% Older Boomers (age 68 to 76).
NAR deputy chief economist Dr. Jessica Lautz interprets the change this way, saying “Baby Boomers have the upper hand in the homebuying market. The majority of them are repeat buyers who have housing equity to propel them into their dream home – be it a place to enjoy retirement or a home near friends and family. They are living healthier and longer and making housing trades later in life.”
Wondering why Boomers chose to buy at this particular moment? About 40% said it was just the right time.
Fewer first-time homebuyers
If most homebuyers were Boomers, it’s not surprising that there were fewer first-time homebuyers overall. Older buyers are more likely to be homeowners than renters, so it’s not their first time around the homebuying block. The breakout shows that only 8% of first-time homebuyers were Boomers, while 58% of Millennials were buying their first home. Gen Xers (age 43-57) still make up a significant portion of first-time homebuyers at 21%. The year-to-year drop in all first-time homebuyers (2022 report to 2023 report) was 8%, falling from 34% to 26%. It’s the lowest percentage since NAR began gathering this data.
Education and income by generation
Gen Xers had the highest incomes, followed by Older Millennials, while Younger Millennials were the most educated, followed closely by Older Millennials. The median annual household income of Gen X homebuyers was $114,300 with Older Millennials at $102,900. Gen Z (age 18-23) had the lowest income at $50,400, but they are starting to buy homes and accounted for 4% of all homebuyers, a 100% increase from the previous year’s 2%! True, it’s a low percentage overall, but buying a home at such a young age is a great start on the path to a strong financial future.
48% of Younger Millennials had either an associate or bachelor’s degree, but Older Millennials weren’t far behind at 41%. In fact an impressive 80% of Younger Millennials have an associate degree or higher. As for Gen Z, they’re age 18-23 so a large percentage aren’t old enough to have anything other than a high school diploma. As for the 2% with a doctoral degree – we are in awe.
And the top reason to purchase a home is….
We know who’s buying, we know how many are first-time homebuyers, we even know their education and income. So let’s look at why they’re buying.
22% of all purchasers wanted to own a home of their own. It’s that simple. That desire peaks at 47% for Younger Millennials and decreases with age. The second most popular reason was wanting to be closer to family/friends/relatives. 13% of all buyers gave this as their primary reason, but starting at age 58 (Younger Boomers), the percentage jumps to 21%, then 20% for Older Boomers and 33% for the Silent Generation (age 77-97). In addition, the third most popular reason for Boomers to buy was retirement. When you consider that 39% of all buyers are Boomers, those are powerful motivations that lead to relocations and home purchases – and sales.
This isn’t part of the NAR report, but when we talk informally about reasons to own your own home, the things that come up often are being able to decorate as you wish, having a yard for kids and pets, building your net worth (we like to see our clients achieve financial security through homeownership), and feeling a sense of community. That certainly fits with the NAR findings.
If this is your year to own a home of your own, contact us.
About the National Association of Realtors® Generational Trends Report
The National Association of Realtors® Generational Trends Report was researched and written by the National Association of Realtors® Research Group. It’s based on data gathered from primary residence homebuyers who purchased their properties between July 2021 and June 2022. For more information or to see the full report, visit https://www.nar.realtor/research-and-statistics
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