Photo: Robert Clark
Nearly one third of all US homebuyers over the last year were Millennials, but the overall share of Millennial buyers is still “underperforming.”
And while the number of Millennial homebuyers reached an all-time high in 2017, depleted inventory continues to drive home prices out of reach for many of this generation’s would-be buyers, according to the results of a new study released last week by the National Association of Realtors (NAR).
Over the last year, the net share of homebuyers in the Millennial demographic rose from 34 percent to a record-high of 36 percent in 2017. Millennials remained the “most active” generational group of homebuyers for the fifth year in a row.
Gen X homebuyers ranked second with a net share of 28 percent, up from 26 percent recorded in 2016.
Millennial household income averaged $88,200 in 2017, up from an average of $82,000 the previous year. While Millennial income increased in 2017, so did the average balance of their student loan debt. As a result, more Millennials reportedly experienced difficulty saving for a downpayment, saying it was “the most difficult task in buying a home.”
Homes purchases by Millennials in 2017 averaged 1,800 square feet, the same as the previous year, but the price was substantially higher. The average price of a home purchased by Millennials in 2017 was $220,000, up $15,000 from the previous year.
Many realtors said there was “a noticeable uptick” over the last year in the number of young adults looking to buy homes, but home prices keep escalating for the small supply of starter homes Millennials can afford. Fierce competition, rapid price acceleration and the need to save additional money is keeping some Millennials from buying.
“These challenging market conditions have caused – and will continue to cause – many aspiring millennial buyers to continue renting unless more Gen Xers decide to sell, and entry-level home construction picks up significantly,” NAR Chief Economist Lawrence Yun says in the digital release.
Another interesting stat revealed by the NAR study is that only 2 percent of Millennials purchased a condo in 2017. Some 85 percent of Millennial homebuyers favored single-family detached homes and over half of homes were located in the suburbs and not in urban centers. Contrary to an overall national migration trend, only 15 percent of Millennials purchased a home in an urban area in 2017.
“While there is an overall trend among households young and old to migrate towards urban areas, the very low production of new condos means there are few affordable options for buyers – especially millennials,” says Yun in the report.
To compile the data used in the study, NAR conducted a survey of 145,800 homebuyers who purchased their homes between July 2016 and June 2017.
Click here to read the entire release.