An ever-evolving housing market is something everyone in the real estate industry can expect and agree on. Lately, however, there’s a debate surrounding the current buyer-seller stalemate, for lack of a better phrase, and who, exactly, is to blame. Is it those pesky millennials? Or, perhaps, the baby boomers?
The National Association of REALTORS® defines millennials and baby boomers in their 2019 Home Buyers and Sellers Generational Trends Report as follows:
- Older millennials were born between 1980
- Younger millennials were born between
1990 and 1998
- Older baby boomers were born between
1946 and 1954
- Younger baby boomers were born between
1955 and 1964
Each side agrees on one thing: The housing market is changing. The debate centers around which generation is to blame for the negative experience many are having with the buying and/or selling process. On one side, millennials apparently aren’t buying homes. What gives? On the other hand, baby boomers apparently don’t want to sell their homes. Huh?
Let’s dive into the details and act as a referee.
Share of Buyers And Sellers By Generation
The chart above shows that millennials are buying, and baby boomers are selling. The issue, however, is this: Neither side is doing enough buying or selling. So, what’s the deal? Let’s start with millennials.
According to Business Insider, housing prices are one of the reasons why millennials may not be buying houses as their predecessors did at their age: “Housing prices have soared by nearly 40 percent in the past three-plus decades, far outpacing wage increases and making homeownership much more of a challenge for today’s buyers… While traditionally renting an apartment or house while saving up to buy your own residence was once a logical approach, since the 1960s, average rental rates have increased by 46 percent, meaning just affording a rental is harder than ever, let alone saving up to buy.”
Rising prices and low inventory are being seen right here in the Lehigh Valley. Local housing prices hit an all-time record this past July. The Median Sales Price reached $222,000, beating out June’s record of $216,500.
Factor in the student loans that are hitting millennial’s wallets with gusto, and it’s no wonder they’re struggling to achieve the dream of homeownership. According to the Home Buyers and Sellers Generational Trends Report, 47 percent of younger millennials have student debt at a median of $21,000, while 42 percent of older millennials have student debt at a median of $30,000.
Money (or lack thereof) is one of the main inhibitors that keep millennials from buying and owning homes. That’s pretty obvious. But there are other things to consider, like the general habits and trends of the millennial generation.
Buyers Who Have Student Loan Dept
As each decade comes and goes, so do trends and cultural movements. The millennials who can afford to buy a home, according to another Business Insider article, don’t want to buy the big houses that baby boomers (the ones who are selling) are offering up.
“Most millennial homebuyers are looking for smaller, more manageable properties than the mini-mansions so popular a generation before,” Business Insider said. “And they like sleek, simple interiors. The result is a steep drop in the value of many of the homes baby boomers are now hoping to sell as they downsize after emptying the nest or retiring.”
Millennials are also deviating from the traditional timeline in which previous generations sought to get married, buy a house, have children, and so on and so forth. The Washington Post described it as “postponing key traditional inflection points that stimulate homebuying.” Thus, millennial home buying statistics are down compared to previous generations that followed a more “traditional” timeline.
As for baby boomers, the main argument going around, according to news outlets like CBS News, is they’re refusing to sell their homes, whereas previous generations often downsized once they reached a certain age.
“Boomers are healthier and working longer than previous generations, which means they aren’t yet ready to sell their homes and strike out for retirement developments,” CBS News reported. “And some may not want to sell their homes because they then must jump into the homebuyers’ market, which is suffering from low inventory and high prices.”
Some baby boomers are even deferring retirement, according to USA Today. “Many boomers are staying in their longtime homes and communities because they’re deferring retirement,” the news outlet said. “About 20 percent of Americans 65 and older are working or looking for jobs, up from 12.1 percent in 1996, Labor Department figures show.”
If baby boomers are physically able to continue making money, then why not? It makes sense for baby boomers who still have kids at home who can’t afford to move out due to today’s high rent and home prices, as well as mounting student loan debt. According to CBS News, “More than one-third of adult children between the age of 18 to 34 are living with their parents. That may make it tougher for the parents to decide to sell, especially in expensive markets where their children might have difficulty finding affordable homes.”
USA Today lists these other possible reasons why baby boomers aren’t selling:
- Plans to downsize in the future (like when they’re 80 years old).
- Housing supply shortage keeping them from finding smaller homes with smaller prices.
- Mortgages are paid off, so why sell?
- Focused on upgrading their homes, not downsizing them.
With each side of the debate having its own reasons for not buying and not selling, how can anyone choose a side to blame and pick on? Each side is deviating from previous buying and selling trends and, therefore, creating a new housing market.
So, what can you do if you’re a millennial or a baby boomer looking to enter the housing market (we’re also looking at you, Generation X, Generation Z, and everyone before, after, and in between)? You can find yourself a REALTOR®. From honest representation and clear communication to cooperative involvement with other REALTORS®, our members are educated, equipped, and ready to serve you.
When you’re looking for a trustworthy, knowledgeable guide through the property-buying or selling process, no one else can offer the service of a certified REALTOR®. To find your REALTOR®, visit www.GreaterLehighValleyRealtors.com, and utilize the “Find a REALTOR®” search in the middle of the page.