Boomers are now biggest group of buyers
Millennials dominated the market in 2021, but as affordability pushed younger buyers to the sidelines, boomers took over as the top group of buyers 2022.
- Rising interest rates and high home prices stymied millennials in 2022.
- The share of first-time buyers dropped to a record-low 26%.
- Buyers are moving farther away, but they intend to stay in their new homes longer.
Thanks to a challenging real estate market, baby boomers are back in the homebuying driver's seat.
The older generation overtook millennials as the generation with the largest share of homebuyers last year, according to a new report from the National Association of Realtors. The 2023 Home Buyers and Sellers Generational Trends report found that the boomer generation had a 39% share of home purchases in 2022, while millennials had 28%.
It's a fairly dramatic change compared to 2021, when millennials had a 43% share compared to the boomers' 28%.
First-time buyers at a disadvantage, while boomers had equity
Two main factors accounted for the generational change, said Jessica Lautz, NAR's deputy chief economist. For one, millennials are still largely first-time homebuyers — a group that struggled with affordability last year.
Affordability had a big impact in 2022, reducing the share of first-time buyers to 26% — the lowest it's been since NAR began tracking this data.
Second, more younger boomers are transitioning into retirement and looking to move closer to grandchildren, other family members or possibly their dream home in a different part of the country.
Baby boomers were better able to make that transition last year because they could use the equity they had built up to avoid taking out mortgages with elevated interest rates, Lautz said in a phone interview.
Youngest buyers doubled their market share
The survey also found that Generation Z gained market share, increasing from 2% to 4%, as more of them entered their homebuying years in 2022.
Gen Z, which is just beginning to hit the 18-23 age bracket, may have received more help from parents to make that first-time home purchase. An estimated 30% of Gen Z homebuyers went directly from the family home into their own place.
"Perhaps [Gen Z] had the bank of mom and dad that really encouraged them to make this purchase," Lautz said, noting that this may have happened more in the first half of the year when interest rates were lower.
Gen X has buying power, unique needs
Sandwiched between two large generations, Gen Xers are still having an impact on homebuying. They are generally the highest income earners at the peak of their careers and can trade an equity-rich home for something new.
Lautz said Gen X buyers are also more likely to be looking for a larger home that serves multiple generations so they can take care of both children and aging parents.
"They are in a more unique situation in that they need to find a home that can accommodate everyone," Lautz said.
More buyers relocating, but expect to stay in homes longer
Another noticeable trend is that buyers are moving farther away. Buyers moved a median of 50 miles when relocating, the highest distance ever recorded and a big jump from 2021, when the median was 15 miles. The ability to work remotely, a desire to find more affordable locations and retirement property purchases contributed to the jump in 2022.
Younger baby boomers (58-67) moved the furthest, with a median distance of 90 miles, while younger generations tended to move shorter distances. Lautz said that because the younger boomers are reaching retirement age and aren't tied to a job, they may have the flexibility to move farther away.
The survey found that buyers in 2022 expected to stay in their home for 15 years on average, which is higher than the 12-year expectation in 2021. For younger millennials, the expected duration was only 10 years, compared to 20 years for baby boomers. Gen Z buyers appeared ready to settle in for the long haul, with plans on to stay in their new home for an average of 19 years.
On the selling side, boomers remained in firm control, representing 52% of the market in 2022. That's up from 42% in 2021. Among all generations, sellers on average were in their homes 10 years before putting it on the market.