Ah, the amenities of city living. Restaurants, theater and entertainment all within walking distance. Sound appealing? Millennials and baby boomers sure think so.
When it comes to house hunting, the two generations – millennials, age 23-38, and baby boomers, age 55-75 – have more in common than ever before. In fact, the 2018 National Association of Realtors (NAR) Home Buyer and Seller Generational Trends Report found that the average size of home purchased between the groups was nearly identical, and the median price of the home purchased was comparable despite the difference in life stages between these two groups.
“Right now, both generations of homebuyers are going for the smaller updated ranch with the price point being in their first house or downsize range,” said Denis Murphy, Broker/Owner of RE/MAX Unlimited in Bohemia, New York, of the trend in his market.
With housing inventory remaining tight in recent years, millennials and baby boomers are often going head-to-head when making offers on a limited number of homes. Both generations can come out winners, and happy homeowners, if they navigate the housing market correctly.
The competition can be stiff between boomers looking to downsize to urban properties from their larger, suburban homes and millennial homebuyers entering the housing market for the first time – and looking for the same properties.
Contributing to this landscape, recent research by Freddie Mac suggests that the population of boomers who are, by contrast, not looking to downsize are instead staying in their homes longer and “aging in place.” This accounts for about 1.6 million houses held back from the market through 2018 by homeowners born between 1931 and 1959, its research shows.
“Factors that affected previous generations, such as moving to a different market for career advancement, are changing now that people are staying in one area for a longer period of time,” said Arnie Stein, a Broker Associate with RE/MAX Master Millennium in Greenwood Village, Colorado. “This is contributing to the decreased supply we’re seeing in inventory.”
Everyone Has an Edge
With roughly the same median household income of the buyer in these two generational groups, how do real estate professionals navigate the market and counsel clients so both generations win?
From a sellers’ point-of-view, each generation has something unique to offer in a bidding war. Whether it is the equity homeowners have built up, or the additional flexibility of first-time homebuyers who don’t have to wait on a contingent sale of a property, the seller has something to gain.
Real estate professionals can provide useful counsel to all homebuyers and sellers in similar situations. Agents will be able to leverage the equity and flexibility of boomers, and in turn, can advise millennials on how to negotiate to make their offer more appealing. An agent can help clients of all backgrounds and ages craft a competitive offer to win the bid.
“Our team has been vigilant in watching market trends, so we can help our consumers take a leap and make a competitive offer when a home that’s right for them comes on the market,” Stein added.
Inevitably, some of this competition will ease as older millennials begin moving to the suburbs for the same reasons boomers originally moved there – school districts, larger yards for their children and oftentimes lower prices than what they would find in metro areas. However, consistently characterized by being partial to minimalism, millennials are looking for smaller homes, sleek appliances and modern design – elements that can be hard to come by in older homes.
Furthermore, younger buyers are seeking newly constructed homes to avoid paying for renovations, plumbing and electrical issues. Boomers looking to retire also want to cut down on the effort spent maintaining such houses, which is why they are prone to downsize. Even as the median income for boomers comes in as slightly under millennials’ income, they are purchasing more expensive homes to ensure preferences on location and home size in retirement – a luxury often prone to an older generation likely to have more buying power.
Regardless of age, a majority of buyers and sellers work with a real estate agent. If preparation leads to execution, working with an experienced real estate agent can help provide a leg up for homebuyers – especially in a competitive market. Across all generations, 87 percent of all buyers purchased their home through a real estate agent. From providing guidance on worthwhile investments, to arming clients with the tools and professionals they need to succeed in their homebuying journey, buyers in both generations have the opportunity to find the home that’s right for them despite the competition.
“The homebuyer’s journey can be laden with obstacles, which is why having a productive agent who can counsel in the areas of inventory and demand are beneficial to success,” said Denver-based agent Leah Schweid of RE/MAX Urban Properties. “With RE/MAX agents having an average of over 15 years in real estate, clients can benefit from this relationship with a greater chance of homebuyer satisfaction.”