Millennials, Gen-Xers and Boomers…Oh, My!
There is much debate over which generational cohort (Millennials, Gen-Xers, Baby Boomers) offers the greatest potential to convert renters-into-buyers.
- REALTOR® Magazine reports that “the number of renters is growing particularly quickly for the 18-to-34 year-old cohort (up 9.1 percentage points since 2006)”
- Harvard University’s Joint Center for Housing Studies concludes “Gen-Xers and Baby Boomers have driven most of the recent growth in renter households”
Let’s put conflicting national statistics aside for a moment and focus on the Grand Canyon State.
- According to an American Community Survey from the U.S. Census Bureau, 37% of households in Arizona are renter-occupied and of those renters, more than one-third are under 35 years of age
- Between 2010 and 2014, median monthly rental costs here rose 8.5% (following a 20% spike 2005-2009) and the Huffington Post reported that the average student debt burden in Arizona was $22.5K with a student loan default rate of 18.4%
CNN Money Reporter Christine Romans says Millennials should be motivated to leave the nest to feather their own, but “scarred by the Great Recession, this generation has been reluctant to jump into the housing market.”
John Frazza, southwest regional sales executive for San Diego County and Arizona home loans at Bank of America, is bullish on older renters and their likelihood of buying a home.
“People over 40 have made up the majority of the rental market over the last decade,” said Frazza. “We’re seeing older renters considering homeownership for various reasons, but most importantly, the rising rental rates.
The National Association of REALTORS® 2015 Profile of Home Buyers and Sellers survey showed that the median age of home buyers was 33 in 1985 and is now 44 (it’s 49 in Arizona’s Rocky Mountain Region 11).
“Many times, they’re interested in a condo at a comparable cost to what they’re paying in rent. They’re attracted by the minimum maintenance and looking at cutting commute time — to work and shopping. They actually talk about increasing their daily ‘step count’ and may be interested in offsetting expenses by selling one of two cars.
“We’re seeing some older buyers looking for a little more space. They’re interested in being able to accommodate their family and their grandchildren on visits. Especially in Arizona, we’re seeing an increased activity in active adult communities. They’re interested in the freedom those communities provide and the flexibility to pursue other interests — traveling, social activities.”
In Arizona, 10.5% of homeowners are under 35 (down 21% over the past five years), but the Pew Research Center cites population projections from the U.S. Census Bureau that, “the ‘Millennial’ generation is projected to surpass the outsized Baby Boom generation as the nation’s largest living generation” this year.
So, which potential buyers do you chase first? All of them.
“You have to be prepared to handle the full range and be able to help each customer in every generation,” added Frazza. “You have to be able to do business the way they want to do business. If they want to do it on the phone, if they want to do it online, if they want to do it in person — you’ve got to have those resources ready.
“Millennials do extensive research online, they’re very well informed. Although many times, their information is incomplete or inaccurate. Ultimately, the complexity of the home buying process requires expertise and REALTORS® offer that.”
Related resources:
Gen X Home Ownership Likely to Stay Low (April 12, 2016)
Housing Preferences Across Generations / Part 1 (March 7, 2016)
NAR Home Buyer and Seller Generational Trends Report (updates periodically)