Young homebuyers remain optimistic and see their home as a good investment, while older buyers are more likely to trade down to a smaller property to match changing lifestyles, according to the 2014 National Association of Realtors Homebuyer and Seller Generational Trends study.
Eight out of 10 recent buyers considered their home purchase a good financial investment, ranging from 87 percent for buyers age 33 and younger, to 74 percent for buyers 68 and older.
NAR mailed a 122-question survey in July 2013 to a national sample of 148,011 homebuyers and sellers who purchased their homes between July 2012 and June 2013, using a random sample of county records. It generated 8,767 usable responses, weighted to be representative of sales on a geographic basis; the adjusted response rate was 6.1 percent.
Lawrence Yun, NAR chief economist, said the millennial generation, which is under the age of 34, is now entering the peak period in which people typically buy a first home.
"Given that millennials are the largest generation in history after the baby boomers, it means there is a potential for strong underlying demand," Yun said. "Moreover, their aspirations and the long-term investment aspect of owning a home remain solid among young people. However, the challenges of tight credit, limited inventory, eroding affordability and high debt loads have limited the capacity of young people to own."
Twelve percent of all recent buyers had delayed their home purchase due to outstanding debt. Of the 20 percent of millennial buyers who took longer to save for a down payment, 56 percent cited student loan debt as the biggest obstacle. Fifteen percent of buyers aged 34 to 48 had delayed buying, with 35 percent citing student debt and 46 percent citing credit card debt.
Even with the market frictions, the study found that the largest group of recent buyers was the millennials, sometimes called Generation Y or Generation Next, those born between 1980 and 1995, who comprised 31 percent of recent purchases. That group was followed closely by Generation X, those born between 1965 and 1979, at 30 percent of the market.