NAR Study: Young Adults Eagerly Entering, Dominating Housing Market
First-time home buyers are swooning over housing. Millennials are comprising the largest share of buyers at 37%, shows the National Association of REALTORS®’ newly released 2021 Home Buyer and Seller Generational Trends report. The youngest buying generation--Gen Z—is also starting to emerge. The majority of millennials and Gen Z buyers are first-time home buyers and are increasingly relying on real estate professionals to navigate their homebuying debut in what has become a very competitive housing market during a pandemic.
In particular, younger millennial buyers—ages 22 to 30—were the most likely to cite a real estate agent as a prime information source they used during their home search at 91%, according to NAR’s survey.
“Buyers used all tools available to them—whether it be a mobile device, yard sign or an online video--but at some point, nearly all buyers turned to an experienced agent to assist with the transaction,” said Jessica Lautz, NAR’s vice president of demographics and behavioral insights. “This is especially true among younger millennial consumers as they are likely first-time buyers and need help navigating the market and all steps involved in the process.”
The use of virtual tours in-home shopping has skyrocketed since the pandemic, particularly among 22- to 40-year-old buyers. “Home buying aside, this segment of the population was already accustomed to doing research online,” Lautz says. “So, to see them really embrace virtual tours and virtual open houses was a given, nonetheless, real estate agents are the top information source, and the data shows these buyers ultimately used agents to purchase a home.”
In navigating this road to homeownership, many of these young adults may be leaving their parents’ homes to buy a home of their own. Twenty-eight percent of buyers between the ages of 22 to 30—which comprise the younger set of the millennial generation—are living with their parents, relatives, or friends prior to purchasing, the NAR study shows. Living with family first tends to allow flexibility toward saving for a down payment and finding a home, given the low housing inventory, NAR notes in its study.
These young adults aren’t shy about going at homeownership alone, either. Twenty percent of buyers between the ages of 22 to 30 were unmarried. In particular, “single women remain a large buying force,” Lautz said.
One of the biggest challenges first-time buyers are facing is finding adequate housing options. Inventory levels have fallen to record lows over recent months. Nearly six in 10 buyers between the ages of 22 to 40 say that finding the right property is the most challenging step in the buying process. That is a problem widespread across age groups: More than half of all buyers—53%--report finding the right property as the most challenging step.
Many young adults are searching for homes in the suburbs. Fifty-four percent of homes purchased by buyers between ages 31 to 40—considered older millennials—were located in a suburb or subdivision.
Despite the growth in remote work since the pandemic, “convenience to the workplace” remains a strong factor in neighborhood choice among the 22 to 30 age group. “The younger millennials overwhelmingly answered that they prefer to live closer to work, as many don’t want a long commute, and this was evident in their buying habits,” Lautz said. “Additionally, both of these groups also placed a high value on being close to family and friends, as 57% said that dynamic factored into what neighborhood they ultimately chose.”