A Zillow analysis of the age, sex, race, and income of home buyers over the last decade revealed demographics might have more to do with the sizzling housing market than the pandemic.
Millennials and baby boomers have been on a path to face off in the housing market since before the pandemic due to retirement trends and Millennials entering their 30s, typical homebuying years.
Though Millennials are currently the most impactful force in the housing market, Boomers are currently gaining. The median buyer age rose from 40 to 44 between 2009 and 2019. The share of recent buyers who are over 60 years old rose 47% from 2009 to 2019, while the share of buyers ages 18–39 dropped 13%.
Lack of housing supply was identified as a primary roadblock for Millennials, as the residential shortage caused by construction slowdowns after the 2008 recession makes competition for homes more fierce.
“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.”
This is reflected in the fact that the share of first-time buyers has fallen from 46% in 2018 to 37% in 2021. Older buyers who can tap their equity have an advantage in a cash-flooded market where homes are selling above their list price.
With equity skyrocketing and houses consistently selling over asking price, current homeowners have an advantage over first-time Millennial buyers without as much to bid.
If this trend continues, another major homebuying force may soon enter the ring: Gen Z. Zoomers are jumping headfirst into the market, doubling their homeownership between 2019 and 2020. A majority of them, 86.2%, want to own a home one day, and of those, 45% are looking to buy their first home in the next five years.
If they follow through on those plans, Millennials could be facing competition from all sides.