You may have heard the term “crying it out” or “CIO”; if you haven’t, your Gen-X and millennial clients with young families most certainly have. But we’re not here to discuss parenting or sleep-training tips. There is a new trend in housing: increasing number of millennial and Gen-X homebuyers are now “waiting it out”.
According to NAR, over 65% of all U.S. homes sold in 2016 went to repeat homebuyers. So why do we constantly see more spotlights on first-time homebuyers? For starters (no pun intended), the decline in overall homeownership rate has been largely attributed to first-time homebuyers, whose share of total buyers dropped to a near-30 year low in 2014. Secondly, it is presumed, rightly so, that the entrance of first-time buyers helps expand the overall U.S. housing market, as buyers typically don’t go back to renting by choice once they have owned their first home.
However, as the industry encourages more first-time buyers to convert to homeownership, it is important to remember that without repeat homebuyers who upgrade to bigger, more expensive homes, starter home inventory cannot be freed up for first-time buyers, and the market size would stay stagnant. It has been reported that home sales this Spring has been slowed by low inventory; and one key reason for the shortage is would-be sellers holding onto their current homes, concerned that they may not be able to find desirable homes to upgrade to. In other words, it is not far-fetched to say that not only are repeat buyers responsible for two-thirds of all home sales, they have a hand in helping close the other one-third as well.
America is famously youth-obsessed. Every few decades, we obsess over the next wave of young people, the new “it” generation. We talk about how they will change the world, drive trends, buy lots of stuff, and propel the economy. Take a look at the daily news headlines: “how Millennials spend their money”, “where Millennials want to work”, “what will Millennials watch this fall”…it goes on.
But how about Gen-Xers? They used to be the media darling. Sandwiched between Baby Boomers and Millennials, and with a smaller head count, are Gen-Xers the forgotten generation? We thought we would devote this week’s trend post to the former “slacker generation” that is making positive waves in housing today.