Largest Group of Home Buyers are Millennials
Recent data from The 2024 Home Buyers and Sellers Generational Trends report reveals that millennials have emerged as the largest group of home buyers, surpassing baby boomers by purchasing 38% of all homes sold. This demographic shift signifies a noteworthy change in the landscape of homeownership.
Two key factors influencing this trend are the COVID-19 pandemic and prevailing high interest rates. The pandemic led to a disruption in dating activities, resulting in what was labeled the "engagement gap." Typically, engagements serve as a precursor to home buying, as they signify the beginning of household formation. With the lost year of dating in 2020 factored in, we anticipate a surge in engagements in 2024 when using data provided by Signet Jewelers (owners of Zales and Jared) that say courtship to marriage takes on average 3.25 years.
This theory gains credence when we observe the increase in first-time home buyers, rising from 28% in 2022 to 38% in 2023. Additionally, there's a notable trend of unmarried couples purchasing homes together before tying the knot. In 1981, less than 1% of first-time home buyers were unmarried couples; today, that figure stands at 16%. The rationale behind this trend lies in the challenge of affordability, particularly with high mortgage rates. Combining incomes, even before marriage, enables couples to overcome this hurdle and achieve their homeownership goals.
The Midwest region has seen a significant rise in median home prices, up by 6.8% from February 2023 to February 2024. In such an accelerated climate, the decision to continue renting and saving becomes less appealing compared to taking the plunge into homeownership, despite interest rates hovering around 7%.
These insights underscore the importance of offering homeownership assistance as part of an employee benefits package. Given that a significant portion of many workforces are comprised of millennials facing similar challenges, this type of benefit inclusion can be instrumental in helping them achieve their homeownership goals. And in doing so, foster loyalty among employees but also attract young talent to an organization.
