A new analysis by Zillow, measuring the age, sex, race, and income of homebuyers over the course of a decade, reveals that millennials and baby boomers—two of the biggest generations in U.S. history—are in the market for homes in a big way.
The study found that while young people are making up a smaller share of recent homebuyers than in previous years, further indicating there is still much pent-up demand from millennial households. However, Americans 60 years and older were more active in the housing market than a decade ago.
With an aging population, assisted by an improving economy, individuals of every age group over 30 were buyers at higher rates in 2019, than those same age groups in 2009.
In 2019, 2.6% of those ages 18-29 had purchased a home in the past year (2.8% in 2009); 5% of those ages 30-39 had purchased a home in the past year (4.1% in 2009); 3.7% of those ages 40-49 had bought a home in the past year (2.7% in 2009); 3.1% of those ages 50-59 had bought a home in the past year (2.3% in 2009); 2.8% of those ages 60-69 had purchased a home in the past year (2.1% in 2009); 2.1% of those ages 70 and older had bought a home in the past year (1.3% in 2009).
A major construction slowdown after the Great Recession contributed to a lower rate of American households forming in the years since that time; there simply have not been enough homes for everyone who wanted to move out on their own, as inventory has constricted of late, resulting in the current record shortage of available listings.
CoreLogic’s latest Home Price Index (HPI) and HPI Forecast for August 2021 found that home prices rose to a fever pitch this summer, with annual price gains reaching an all-time high in August at 18.1%, compared to August 2020, marking the largest 12-month growth in the U.S. Index since the series began (January 1976-January 1977). On a month-over-month basis, home prices increased by 1.3% compared to July 2021.
"Even before the pandemic, the largest-ever generation entering their 30s, and the hangover from more than a decade of underbuilding were on a collision course set to define the U.S. housing market," said Jeff Tucker, Senior Economist at Zillow. "The pandemic supercharged demand for housing, bringing the shortage into relief sooner than we expected, as millennials sought bigger homes with Zoom rooms, and older Americans accelerated retirement plans, spurring moving decisions."
Even as millennials are the biggest players in the U.S. housing market, buyers are trending older. The median age of a recent buyer—somebody who bought a home in the past year—was 44 in 2019, up from the age of 40 in 2009. That's largely because baby boomers, who make up a big share of the population, were also more active in the housing market than those their age just 10 years prior. The share of recent buyers who are 60-years and older grew 47% from 2009 to 2019. Over the same period, the share of recent buyers ages 18-39 fell 13%.
In 2019, 42% of recent buyers were ages 18-39 (48% in 2009—a 13% decrease in the share); 34% were ages 40-59 (35% in 2009—a 5% decrease in the share); 24% were 60 and older (16% in 2009—a 47% increase in the share).
"There are many hurdles millennials must overcome when buying homes of their own, one of them being fierce competition from the next-most-populous generation: baby boomers," Tucker said. "Whether downsizing or moving to a new town, baby boomers being more active means competition that previous generations did not have when buying their first home. And older buyers have the advantage of a lifetime's worth of savings and home equity to leverage in a competitive offer."
More than half of homes sold in July 2021 went for above their list price, usually meaning the buyer expected the home to receive multiple offers. U.S. home values grew 31.2% from 2009-2019, and they've grown an additional 22% since then, representing massive equity gains for longtime homeowners. Because baby boomers are more likely to be homeowners who can use the proceeds from the sale of their current home toward their next one, they have a built-in advantage in a bidding war against younger buyers, who are often buying their first home.
A survey of Zillow Premier Agent partners found all-cash offers, which are more common for repeat buyers, are the top strategy for winning a competitive bid.
Click here for more on Zillow’s analysis.