Homeowners in Generation X are making a comeback after coming up in the housing crash, according to the National Association of REALTORS® (NAR) recently released Home Buyer and Seller Generational Trends study for 2017. More Gen X homeowners—who were most dogged by the downturn—are set to sell this year, having regained enough equity lost in the recession.
“Gen X sellers’ median tenure in their previous home was 10 years, which puts many of them selling a property they bought right around the time home values were on the precipice of declining,” says Lawrence Yun, chief economist at NAR. “Fortunately, the much stronger job market and 41 percent cumulative rise in home prices since 2011 have helped a growing number build enough equity to finally sell and trade up to a larger home. More Gen X sellers are expected this year, and are definitely needed to ease the inventory shortages in much of the country.”
Gen X has taken a backseat to millennials in recent years, who have been the primary source of opportunity in housing, Yun says. More activity on the part of Gen X homebuyers and sellers this year opens up new prospects in the market.
According to the survey, the share of Gen X homebuyers grew to 28 percent—the largest percentage since 2014—but is behind the share of millennial homebuyers, 34 percent, and the share of baby boomer homebuyers, 30 percent. The trend toward multigenerational living is going strong, driven by baby boomers housing adult children who either have not moved out or moved back in after moving out.
“The job market is very healthy for young adults with a college education, but repaying student debt and dealing with ever-increasing rents on an entry-level salary are forcing many to either shack up with several roommates or move back home,” says Yun. “This growing trend of delayed household formation is one of the main contributors to the nation’s low homeownership rate.”
Student loan debt is also an issue for Gen Xers and younger boomers, though Gen Xers have the biggest burden, with a student debt load of $30,000—more than millennials’ $25,000 and boomers’ $10,000, according to the survey. Student debt plays a major role in the ability to save for a down payment on a home; in fact, 55 percent of millennial homebuyers, 29 percent of Gen X homebuyers and 9 percent of boomer homebuyers report student debt has stifled their savings.
“Repaying student debt also appears to be slowing some current homeowners who went to graduate school and now can no longer afford to sell and trade up because of their loans,” Yun says. “Nearly a third of homeowners in a NAR survey released last year said student debt is preventing them from selling a home to buy a new one.”
Gen Xers aside, there are shifts occurring in the millennial generation. One significant movement, according to survey, is the presence of children: 49 percent of millennial homebuyers have at least one child, prompting more home-buying activity in the suburbs.
“Millennial buyers, at 85 percent, were the most likely generation to view their home purchase as a good financial investment,” says Yun. “These strong feelings bode well for even greater demand in the future as more millennials settle down and begin raising families. A significant boost in new and existing inventory will go a long way to ensuring the opportunity is there for more of them to reach the market.”
What hasn’t changed, according to the survey, is the need for a real estate professional. Ninety percent of those surveyed worked with a real estate professional to buy or sell a home—92 percent of millennial homebuyers and 90 percent of millennial sellers, and 88 percent of Gen X homebuyers and 89 percent of Gen X sellers.