Homebuying Behaviors Across Generations
Homebuying is an exciting experience at any age. At Mark Spain Real Estate, our agents understand the lifestyle patterns and needs of different generations. From millennials to baby boomers and even Gen Xers, they are proud to serve as your guides as you embark on a home buying journey. Armed with thorough research and planning, our agents strive to make your experience as seamless as possible.
Defining the Generations
There is often confusion when discussing the “generation titles.” Who exactly falls into Generation X? Who is considered a millennial? While there is overlap depending on the source, the most common definitions are as follows. In this article, we will focus on millennials, Generation Xers, and baby boomers. These demographics are the generational cohorts that are the most frequently buying and selling homes.
- Millennials are individuals ages 23-38 (Born 1981-1996)
- Generation Xers are individuals ages 39-54 (Born 1965-1980)
- Baby Boomers are individuals ages 55-73 (Born 1946-1964)
The methods utilized by a 25-year-old millennial when searching for a home will differ from the process of a 60-year-old baby boomer. It is important to understand the differences in these home buying patterns to accurately identify what would be most appealing to new homebuyers.
Homebuying Across Generations
Across all generations, mobile shopping and web-based research are becoming commonplace. Buyers from all ages are using smartphones and tablets to research and inevitably purchase items, including real estate. They often know what they want to see prior to even picking up the phone to contact a REALTOR®.
Younger generations are often rushed for time. These are the career-driven individuals who often have young families. When they have reached the point where they can purchase a home, they have developed clear expectations regarding what they want and how much they can pay. Older generations are often more inclined to focus on value for their money. They have the extra time to “shop around” for the best deal or to wait out the offer and counteroffer process when homebuying.
Purchasing Differences Across the Generations
Given the differences in age, income, lifestyle, and life experiences, it is not surprising that the millennials handle significant life purchases, such as a home, very different than those members of other generations, such as baby boomers.
As noted above, all age groups are becoming more inclined to “do their research” regarding a home purchase. Therefore, it is vital to assure property information is accurate and available online. The ability to go online, view home information and see photos is essential in the decision-making process. Homebuyers across all generations will start their search online before going to an agent armed with information and questions. However, baby boomers are more likely to want an agent to show them around multiple properties. On the other hand, millennials have a lot of their decisions already made before contacting an agent.
Finally, time is considered differently across the generations. Millennials typically “act faster” than baby boomers when making their purchase decisions when homebuying. Given the limited number of affordable properties on the market that may be most suitable for their active lifestyles, millennials tend to conduct their market research early and make their decisions faster. They don’t want to lose out on a golden opportunity. Baby boomers and Generation Xers want to view many properties and then take the time to mull them over before making a decision. This slower process can be both beneficial and detrimental. Sometimes their desired property may be sold before their decision is made when homebuying.
What are Homebuyers Searching For?
Millennials are often (not surprisingly) first-time homebuyers. Many have rented before and have chosen to purchase a home for a variety of different reasons. Some of these include lowering commuting costs, wanting security with marriage and family on the horizon, investing and owning rather than renting without any return on investment, and simply the pure desire to want to own rather than rent. By comparison, baby boomers are often purchasing a new or different home due to retirement, relocation or downsizing. Baby boomers may also be searching for some of the more modern amenities of newer homes. They will be looking to reduce future renovation costs, utility bills, and general maintenance costs when homebuying. Then, there are the Generation Xers who may be in their peak earning years. They may be in the home buying market to upgrade to a larger home or experiencing lifestyle changes, such as multigenerational living.
Millennials Income Challenges
Finances differ from generation to generation. Over the last few years, home prices have continued to increase. This makes homebuying a challenge for a large amount of millennials. Many millennials may carry a large sum of student loan debt. Student loan debt is cited as a challenge to obtaining loans for first-time homeownership. When lenders look at the debt-to-income ratios of this generation along with their income and time in their current job, they often perceive negative outcomes to their loan requests. This generally causes millennials to seek assistance from a real estate agent who can help them access assistance in this area. <Check out our blog about the Shelter Mortgage 0% Down Payment Program>
Millennials are more likely to stretch their home budget dollars to make a purchase happen. They may have lost out a few times on a property due to income restrictions or less than ideal credit score ratings. Similarly, they are more likely to take risks in their purchasing by making an offer without home inspections or financing contingencies.
Baby Boomer Income Challenges
Baby boomers, in contrast, are beginning to consider retirement and the potential reduction in income associated with this phase of life. Most baby boomers have already been homeowners. They are looking to relocate to a retirement home or downsize. Like millennials, baby boomers face financial challenges as well. Many already have mortgages on their first property. They need to consider how they will secure and pay a second mortgage while awaiting the sale of their existing residence. This is provided they do not intend to maintain two households. Baby boomers also must consider their retirement income threshold. Although many have planned and have a “nest egg” to work with, there is often a significant reduction in income when one or both household members retire. Baby boomers are also likely to turn to their agent to guide them with suggestions and ideas in this area.
Are you a potential homebuyer looking to make a first-time purchase or second home purchase? Do you wish to close the deal and sell your current home? Do you have questions about the process or where to start? Mark Spain Real Estate is here to help! Contact us today to enjoy a stress-free head start. Want to read more about generation influences? Click here.