In this article, we’ll look at the three largest generations in real estate: Baby Boomers, Gen X, and Millennials to predict their trends, housing preferences, percentage of buyers/sellers, median household income, top reasons for purchasing a home, and additional fun facts.
2020 will be very unpredictable and there will be many changes. As I’ve shared in a previous article, The 5 External Factors That Will Affect Your Real Estate Business in 2020, there are 5 factors that will affect your real estate business. The main factors to be aware of is the volatile economy and new housing regulations in 2020. These factors will also affect consumers differently, usually based on their age demographic or generation. The main trend in 2020 is the growing number of generational housing overlap. This means that Boomers are moving in with their Gen X or Millennial children, and vice versa. Due to this trend along with housing shortages, detached single-family homes, and multi-generational homes are increasing in demand.
1. The Baby Boomer Generation
Born between 1944 and 1964, Baby Boomers, also known as “Boomers”, are currently between the ages of 55 and 75 with approximately 76 million individuals in the U.S. They usually live alone or with their partner, are leaving the job market and retiring, and are finally purchasing their first home.
- Transaction Trends: Boomers are either downsizing or not moving. Boomers that are downsizing prefer to live closer to family, friends, and relatives. They want a reliable support system but desire independence. Boomers that are not moving will remain in their “forever home”. If a Boomer remains in their forever home, there's a good change their children either still live with them or might move in with them.
- Housing Preferences: If a Boomer decides to move, they’re likely to migrate to either a detached single-family home, multi-generational homes, or 55-and-over communities. In other words, they'll either move in with their children or they’ll move into a community with their peers. From experience, I know that Boomers prefer lower counter tops and minimal stairs.
- Percentage of Total Buyers/Sellers: According to NAR’s 2019 Home Buyers and Sellers Generational Trends Report, 32% of home buyers and 43% of home sellers were Boomers. We should expect to see a decrease of home buyers and an increase of sellers in 2020.
- Median Household Income: In the same NAR article, the median household income for Boomers was $92.5K – the 2nd highest generation. We should see similar figures in 2020.
- Top Reasons for Purchasing a Home: The NAR article also states, the primary reasons Boomers purchased their home was because they wanted to be closer to family, friends, and relatives (16%), retirement (14%), and they wanted to be a homeowner (12%). We should continue to see this trend in 2020.
- Fun Facts: According to NAR, Boomers account for 1/3 of all home ownership in the US and they account for 32% of recent US home Buyers.
- Educate home buyers about different age demographic statistics
- Share buyer motivations, housing preferences, median household income, and more by generation
- Motivate buyers to act sooner rather than later
2. Generation X
Born between 1965 and 1979, Generation Xers, also known as the “Latch Key Generation”, are currently between the ages of 40 and 54 with approximately 82 million individuals in the U.S. They usually live with family but have children leaving their home or parents moving in.
- Transaction Trends: Gen Xers are either up sizing or downsizing. Gen Xers usually up size because they will move in with their children or parents. Their children are unable to purchase their own home due to student debt or low inventory. They’re moving in with their aging parents because it’s more affordable than live-in care. On the other hand, Gen Xers that are downsizing have children leaving their homes and desire a smaller home.
- Housing Preferences: When Gen Xers move, they'll likely to move into either detached single-family, multi-generational, or 3- or 4- bedroom homes. This is to accommodate their children or their parents – housing more family members.
- Percentage of Total Buyers/Sellers: In the NAR article mentioned earlier, 24% of home buyers and 25% of home sellers were Gen Xers. That means there was almost an even distribution of homes in and homes out for his generation. We should see a similar trend in 2020.
- Median Household Income: Gen Xers have the highest median household income of all the generations at about $110K.
- Top Reasons for Purchasing a Home: The NAR article also states, the top reasons Gen Xers purchased a home was because they wanted to own their home (27%), due to job-related relocation (12%), and they wanted a larger home (11%). We should see a similar trend in 2020.
- Fun Facts: According to NAR, Gen Xers purchase homes with the most square footage (Median: 2,100 sqft), they account for 24% of recent home buyers, and 16% of Gen X home buyers purchased a multi-generational home.
3. The Millennial Generation
Born between 1980 and 1994, Millennials are currently between the ages of 25 and 39 with approximately 95 million individuals in the U.S. They are usually getting married, having children, and starting their families. The primary reason Millennials hold back from purchasing a home is due to student debt.
- Transaction Trends: Many Millennials are either starting or growing their families while some move in with their parents, or vice versa. Millennials home buyers want a single-family home to raise their family or a multi-generational home to accommodate their parents.
- Housing Preferences: Since some Millennials are starting their families, they are looking for single-family homes. Millennials looking to house their parents desire multi-generational homes. With multi-generational homes, older generations can help raise Millennials’ children and they can receive help from their Millennial children.
- Percentage of Total Buyers/Sellers: According to NAR, 37% home buyers and 20% home sellers were Millennials. We should see the home buyer and seller percentages increase in 2020.
- Median Household Income: In the same NAR article, the median household income for Millennials was $92K. We should see this number increase in 2020.
- Top Reasons for Purchasing a Home: When a Millennial decides to purchase a home, they do it because they want to own their home (42%), they want a larger home (16%), and due to a change in family like marriage, divorce, or newborn (7%). We should see a similar trend in 2020.
- Fun Facts: According to NAR, 69% of first-time home buyers were Millennials, they account for 37% of all home buyers, and the convenience to their job highly influenced neighborhood choices (7%).
2020 will be an extension of 2019, as these trends began in 2018 and gained traction in 2019, they will begin to dominate the real estate market. The major trend among all generations is the increase of multi-generational homes (I'm going to add detached single-family homes to his group too) in reaction to low inventory and student debt - plus it's more cost efficient than pay for live-in care. Additionally, with multi-generational homes, older generations can help raise their grandchildren and younger generations can take care of their parents.