Millennials Increasingly Buying in Suburban Areas, NAR

Washington, DC, March 10, 2016—A growing share of homebuyers are millennials, and more of them are purchasing single-family homes outside of urban areas, according to the 2016 National Association of Realtors Home Buyer and Seller Generational Trends study, which evaluates the generational differences of recent home buyers and sellers. The survey additionally found that although student loan debt is more prevalent among millennial buyers, they aren’t the generation with the largest student debt balances.

The share of millennials buying in an urban or central city area decreased to 17% (21% a year ago) in this year’s survey, and fewer of them (10%) purchased a multifamily home compared to a year ago (15%). Overall, the majority of buyers in all generations continue to purchase a single-family home in a suburban area, and the younger the buyer, the older the home they purchased.

Lawrence Yun, NAR chief economist, says while millennials may choose to live in an urban area as renters, the survey reveals that most aren’t staying once they’re ready to buy. “The median age of a millennial homebuyer is 30 years old, which typically is the time in life where one settles down to marry and raise a family,” he said. “Even if an urban setting is where they’d like to buy their first home, the need for more space at an affordable price is for the most part pushing their search further out.”

Adds Yun, “Furthermore, limited inventory in millennials’ price range, minimal entry-level condo construction and affordability pressures make buying in the city extremely difficult for most young households.”

For the third straight year, the largest group of recent buyers were millennials, who composed 35% of all buyers (32% in 2014), more than the combined amount of younger and older boomers (31%). Generation X were 26% of buyers, and the Silent Generation made up 9%.

This year’s survey underlined the challenges debt had on some buyers’ ability to purchase a home. While debt delayed saving for a down payment for a median of four years for all buyers, the number of years postponed increased from three years for millennials to six years for older boomers.

Among the share of buyers who said saving for a down payment was the most difficult task, millennials were most likely to cite student debt (53%) as the debt that delayed saving, while credit card debt was indicated more by Gen X (44%) and younger boomers (36%).

This year’s study found that 86% of all buyers in the past year financed their purchase (88% a year ago). Younger buyers who financed their home purchase most often relied on savings for their down payment, whereas older buyers were more likely to use proceeds from the sale of a primary residence.

Overall, the median downpayment ranged from 7% for millennial buyers to 21% for older boomers and the Silent Generation. Nearly a quarter (23%) of millennials cited a gift from a relative or friend, typically their parents, as a source of their down payment.