A new report finds that baby boomers are now leading the way in home buying after decades of equity growth, while first-time buyers face record low participation amid rising costs.
WASHINGTON — Baby boomers have surpassed millennials as the largest group home buyersalthough the share of first-time home buyers has fallen to its lowest level since 1981, According to the National Association of Realtors’ Next Generation Trends Report.
Baby boomers currently account for 42% of home purchases, driven largely by decades of accumulated home equity. Millennials are next at 26% and Generation X at 25%.
Many baby boomers are using these equity payments to pay directly in cash—avoiding today’s skyrocketing interest rates entirely.
Meanwhile, first-time buyers make up just 21% of the market, the lowest level in more than four decades of tracking. Rising home prices, rising interest rates and increasing insurance and tax costs have created significant barriers to entry for young buyers.
“This is a market that needs to be strategic,” said real estate expert Lane Lyon. almost.
To address affordability challenges, many families are turning to multi-generational living. About 14% of buyers this year purchased a home to share with family.
Demand for homes with main-floor bedrooms and finished basements is rising sharply, Lyon said.
“Nearly every listing I get now, I get a call saying, ‘Do you have a bedroom on the main floor because I want to move my mom in,'” Lyons said.
Lyons expects the multi-generational living trend to continue until interest rates come down.
Baby boomers also still dominate when it comes to sales, accounting for 55% of all home sellers. the report stated.
“The housing market remains deeply divided between homeowners with equity and first-time homebuyers trying to break in, many of whom are young millennials,” said Dr. Jessica Lautz, NAR deputy chief economist. “For many young families, affordability challenges and limited inventory still make homeownership difficult.”
“Baby boomers are at a stage in their lives where they have the flexibility to move and can often use home equity to help purchase their next home,” Lautz said. “In earlier years, baby boomers — like today’s millenials — might have moved because of job changes or the need for a larger home. Today, many boomers are embracing the choice of moving closer to friends and family, downsizing, or retiring and enjoying a job-free lifestyle.”
