Millennials and baby boomers — two of the biggest generations in U.S. history — are in the market for homes in a big way but only one of these two demographics is pulling ahead in the competition.
While millennials are the biggest players in the U.S. housing market, buyers are trending older, according to Zillow. The median age of a buyer that purchased a home in the last year was 44 in 2019, up from 40 in 2009. The company attributes this increase to baby boomers, who make up a big share of the population, becoming more active in the housing market than they were in years past. The share of recent buyers who are 60 years and older grew 47% from 2009 to 2019, according to the report. Over the same period, the share of recent buyers ages 18–39 decreased by 13%.
According to Zillow, with an aging population helped by an improving economy, individuals of every age group over 30 were buyers at higher rates in 2019 than those same age groups in 2009. However, a major construction slowdown after the Great Recession contributed to a lower rate of American households forming in the years since that time. With such a large lack of housing, securing a desirable home has become an incredibly difficult task.
“Even before the pandemic, the largest-ever generation entering their 30s and the hangover from more than a decade of underbuilding were on a collision course set to define the U.S. housing market,” said Jeff Tucker, senior economist at Zillow. “The pandemic supercharged demand for housing, bringing the shortage into relief sooner than we expected, as millennials sought bigger homes with Zoom rooms, and older Americans accelerated retirement plans, spurring moving decisions.”
Millennials are at a disadvantage as skyrocketing housing costs from pre-pandemic housing trends and student debt makes saving for a down payment an increasingly daunting task. They also generally face more competition from their parents' and grandparents' generations than their predecessors did, according to Zillow. Zillow believes this is likely one reason the share of buyers who were buying their first home has trended down from 46% in 2018 to 37% in 2021.
Home values have increased at a rapid pace from 2009 to 2019, with Boomers making huge gains in home equity. Baby boomers are more likely to be homeowners who can use the proceeds from the sale of their current home toward their next one, giving them a built-in advantage in a bidding war against younger buyers, who are often buying their first home. All-cash offers have been a big difference maker between the two demographics.
“There are many hurdles millennials must overcome when buying homes of their own, one of them being fierce competition from the next-most-populous generation: baby boomers,” said Tucker, according to the Zillow report. “Whether downsizing or moving to a new town, baby boomers being more active means competition that previous generations did not have when buying their first home. And older buyers have the advantage of a lifetime's worth of savings and home equity to leverage in a competitive offer.”
