A rising number of homebuyers are buying larger residences than previous years, including millennials who make up the largest share of homebuyers at 37%. In today’s heated market, many of them face intense competition and bidding wars to pay double the listing price on their house. However, baby boomers have been making out like bandits, controlling 43% of the seller’s market.
Sellers have all the advantages in today’s market. Swelling price inflation allows sellers to reap bigger profits from selling their house, making it easier to afford a new home. Those who sold their home during the pandemic made a median of $66,000, which is $6,000 more than the year prior.
Sellers aged 55 and younger were more likely to upgrade to a larger, more expensive home while staying in close proximity to their old home. Sellers aged 56 and older were more likely to move into a similar-sized home, but less expensive than their previous home because they moved farther away.
Sellers stayed in their previous home for a median of 10 years, while those between the ages of 31 to 40 stayed for a median of six years. For sellers aged 66 and older, they stayed in their previous home a median of 16 years. These homes were on the market for about three weeks before being sold.
Chief economist at Realtor.com, Danielle Hale said, “In a real estate market that is tipped in the favor of sellers, boomers and older homeowners are really the ones holding the cards. Those who are selling homes can use the profits to help them buy new ones,” she adds, pointing out that they’re “generally better equipped to deal with market conditions.”
The combination of low mortgage rates, low inventory, and high demand for a new abode has sent prices skyrocketing for the past year and a half. As a result, sellers got 99% of what they asked for, or more.
The top reason boomers listed for selling their home was the need for a home closer to their family and friends -- understandable after enduring lockdowns and isolation throughout the pandemic. The second most popular reason was to downsize.
Jessica Lautz, NAR’s vice president of demographics and behavioral insights, said, “Millennials have a lot of headwinds entering the real estate market. There’s not enough homes to go around for the buyers who want to be able to purchase.”
Nearly 60% of buyers aged 22 to 40 said the biggest obstacle was finding the right home. As a result, younger buyers were the most likely to pay over asking price to secure a home.
“In a market where competitive bids are the norm in many areas, it’s interesting to note that younger buyers are more likely to pay over asking price,” added Hale. “They’ve got longer working careers, so they may be more willing to take risks.”
For more information on the NARs survey, read the Home Buyers and Sellers Generational Trends report.
