While we continue to have inventory shortages in real estate markets nationwide, people are continuously asking: “Who is buying all of these homes?” Below is an excerpt explaining the generational breakdown, written by Jennifer Hawkins for the May issue of ‘Gig Harbor Living Magazine’.
Home Buyers Broken Down by Generation Let’s start off by talking about the “Baby Boomers”. A Baby Boomer was born between 1946-1964. They have dominated the buying pool for the last two decades. During The Great Recession (2008-2009) the “Boomers” were the majority able to purchase. They were downsizing and moving to all one level or getting rid of it all together to enjoy their second home. They were able to capitalize on the decreasing prices and buy with cash. Many of the “Boomers” are now trading in for condos or just staying put and “aging in place.” Although an important part of our economy, they have not been the one talked about in this buying frenzy of late.
The generation dominating conversation, and the first generation to compete with the Boomers on size, is the MILLENIALS. Millennials have surpassed the Boomers population and have now begun to dominate the buying pool. Millennials were born 1981-1996. Most of them are now first-time homebuyers. Living in a tech heavy location, the Millennials are doing well financially. Many of their entry level jobs start in the 6 figures. Six figure incomes plus 3% interest rates & they are ready to invest in real estate. Pair this largest generation and a backlog of new construction (COVID restrictions) and there aren’t enough homes to house these anxious first-time home buyers.
While the Millennials are the driving force in today’s buying pool, we must not forget Generation X. Gen X was born between 1965-1980. There are about 65 million Gen Xers in the U.S., according to the Pew Research Center. That makes the generation smaller than both the Baby Boomers (more than 71 million people) and the Millennials (more than 72 million people).
The group is in its prime earning and homebuying years, meaning it’s a force to be reckoned with. Generation X dominates the present and that means understanding them is a vital part of making sense of the housing market. The housing collapse of 2007 and 2008 remains a major chapter in their story, although their net worth has since recovered and by 2016 had surpassed pre-recession highs. According to NAR (National Association of REALTORS), 37% of Gen X households make between $85,000 and $150,000 per year. Another 17% make more than $200,000. Gen Xers are now late in their careers and in the prime of their earning lives.
Gen X is not the biggest generation in the U.S., they’re not the most talked about, but they have been investing in real estate longer than the Millennials and have more liquid funds than the Boomers, allowing them to win more often in the real estate frenzy. They fought their way back out of the Great Recession and are some of the savviest in today’s real estate market.