National Association of Realtors deputy chief economist Jessica Lautz joins Wealth with Julie Hyman to discuss the changing dynamics among home buyers.
To watch more expert insights and analysis on the latest market action, check out more Wealth here.
The dynamics in the housing market have shifted once again, with baby boomers regaining the top spot as the largest share of home buyers in the U.S., overtaking millennials, who fell by nearly 10% from the year prior. This is all according to latest data from the National Association of Realtors. And joining us now on this is Jessica Lautz. She's the deputy chief economist and vice president of research at the National Association of Realtors. Jessica, it's good to see you. So this is really interesting here, um, that baby boomers retook that top spot. What drove that change?
Well, it really has to do with housing equity. Baby boomers are really the winners in today's housing market. When we talk about that bifurcated housing market, we can see young millennials struggling to get in, uh, really wanting to become first-time home buyers, but baby boomers have housing equity and they're making their moves in retirement.
And I guess because of that housing equity, we're seeing more cash buyers as well. I guess if you're, you know, if you've got that equity that you've built up in your baby boomer and you sell your house,
then you have, I guess that liquidity to use to buy another one.
Yeah, certainly. We're, we're really seeing stacks of cash in the housing market right now. Uh, when we look at older boomers, we actually know about half of them are purchasing their home with all cash, so someone in their 70s. If we look at someone who's in their 60s, so a younger boomer entering into retirement or perhaps close there too, uh, we can see it's about 40% of folks who are purchasing their home with all cash. And if they're not making an all-cash purchase, they're making a home purchase with a very large down payment. So it's really offsetting a lot of the costs they're able to purchase exactly what they want to do in that perfect neighborhood that they want to be in.
So that's really interesting because when you look at the older generation overtaking, once again, the younger generation, you would think affordability would be a factor.
But it sounds like what you're saying is it's also that cash and down payment, um, percentage is a factor, because I imagine younger buyers are less likely to have that ability to give that larger down payment.
Oh, certainly. I mean, when we look at younger buyers, uh, they're going to be financing their home purchase largely. Now, I want to say one thing here is that millennials are the biggest generation in the US today. So when we see them left out of the housing market, it doesn't make a ton of sense. But what we can see is that when we divide up the millennial generation, just knowing how big it is, we actually see that older millennial buyers are more likely to be repeat buyers in the market. So they're earning that housing equity too. They're not at the point where they can make an all cash purchase, but they do have that in tow when they make their next purchase.
One of the other trends you all notice is the rise of multi-generational homes, right? I'm a sandwich generation person, so I get it, right? People buying homes where maybe their parents are living with them. How, how widespread is that trend? What can you tell us about it?
Oh, it's extraordinary. When we look at Gen Xers, it's about 20% of them are actually purchasing a multi-generational home to take care of aging parents, to take care of kids over the age of 18 who've boomeranged back, kids under the age of 18. So everyone within this household, that's a lot of financial pressure on that Gen X buyer. And we know that they have to have a higher income to be able to support everyone, perhaps other folks actually adding into expenses in that household as well, hopefully. Uh, but we also know they need a larger home to accommodate everyone.
And one of the other trends that intrigued me is when we're talking about single buyers, that young women are growing percentage of those buyers. Um, what, what's behind that trend?
Yeah, absolutely. So we have a drop in marriage rates overall in this country, but single women are really outperforming, uh, both in the young and the older spectrums. So we certainly see that women perhaps coming from a marriage or divorce, uh, perhaps they're widowed are actively buying in the real estate market as a baby boomer, even in the silent generation. Uh, for young buyers though, we really see that there's a lot of Gen Zers who are single, uh, and they're coming into the market. They're not yet married or coupled up, uh, and so they really want to take advantage of home ownership and really buying trends out there.