Buyer Profiles 2023 - Millennial + Gen Z
Here we’ll explore the different profiles of Millennial and Gen Z buyers - each group has a different reason for buying and different characteristics of a home they prioritize. Read the below and see which one fits most closely to you!
Before we get into buyers, let’s get into Homeowners (aka “Sellers”)
Reasons for Selling: Homeowners are selling their properties need to move for family (24%), for more space (23%), to downsize (23%), and for life changes (18%) such as a new marriage, child, or divorce. They are also weighing financial considerations: ~24% are selling to make a profit, and 21% wan to capitalize on price increases
What they’re expecting: ~12% of sellers expect their home will receive multiple offers (down from 27% in 2023); 15% of homeowners are hoping to get offers more than their asking price (down from 31% in 2023). 15% are prepared to receive an offer within a week of their home going up for sale (down from 37% in 2023). 15% are expecting buyers to waive contingencies, such as home inspections and appraisals (down from 35% in 2023).:
Millennial Buyers:
~38% of all buyers were Millennials in 2023 (up from 28% in 2022). 1/3 of these buyers or 32% were first time home buyers (up from 26% in 2022)
Income: Millennial homebuyers had a median income of $107,000 (with younger millennials aged 25-33 having a median household income of $106,000 and older millennials aged 34-43 having $127,7000)
Reasons for buying: ~52% of younger millennials and 45% of older millennials said that their top reason for when they purchased their homes was because it was the right time to do so. ~1/4 of both groups said they didn’t have a choice and had to buy. ~82% of all buyers said they considered buying a home as a good financial investment
Baby boomers may have stepped aside a bit, purchasing ~31% of all homes (down from 39% in 2022) which may have given Millennials more opportunities in the market
What they’re looking for: as a budget-friendly generation, millennials are seeking smaller, more affordable, sustainable homes with low-maintenance outdoor spaces.
Community is important, so having access to transportation is a priority (having a garage or being located near public transportation)
Millennials are not willing or able to spend on large renovations, so they tend to avoid homes with outdated fixtures or yards that require maintenance or more upkeep, and are attracted to homes with drought-friendly yards, energy-efficient fixtures and appliances, strong internet connection and strong cell reception (Rocket Homes)
What they’re buying:
87% of buyers purchased previously owned homes, 13% purchased new construction homes
79% of buyers purchased detached single-family homes, typically with 3 bedrooms, 2 bathrooms, 1,860 sqft, constructed in 1985
47% of buyers purchased in the suburbs or in a subdivision, 23% purchased in a small town, 14% bought in a rural area, 14% bought in an urban area, 2% purchased in resort areas
Where they’re buying: tech hubs like Seattle, Philadelphia, Pittsburgh, San Jose, Austin, Denver
Gen Z Buyers:
~18% of Gen Z (ages 18-24 years) are already homeowners, making up 4% of all homebuyers
Gen Z is known for being more thrifty and financially responsible, compared to previous generations. They are up against high home prices, rising mortgage rates, low inventory, and competing against investors and homeowners who can outbid them with all cash offers
Reasons for buying: 34% state their main motivation for buying is to start or grow a family, which is drastically different from millennials who have been slower to start a household. The next top reasons for buying were: to establish residential stability (21%), not wanting to rent (18%), stabilizing monthly housing costs (9%), for investing reasons (8%).
What they’re looking for:
Smaller units that are cheaper and easier to maintain: apartments, condos, townhouses over single family homes
Places of work: with many Gen Z members working remote schedules, having properties with home offices or quiet areas they can log in for the day is important
What they’re willing to give up: garages, large kitchens, location in expensive urban areas
What they’re not willing to give up: home technology (connected/smart homes), high-speed internet, in-unit washer and dryer, central air conditioning. 61% need a dishwasher, ~50% are looking for a private outdoor space
Cheaper parts of the country: Jacksonville, Virginia Beach, Cincinnati, Detroit, St, Louis
Military communities: where younger clients can use VA loans, which means there are no down payments and often receive lower mortgage rates (ex: Watertown, NY; Hinesville, GA; Lima, OH)
Which buyer profile do you identify with, and did the result surprise you? What are your reasons for buying and what are some deal breakers in a home you’re not willing to give up?
Wherever you are in your homebuying or selling journey, feel free to reach out to me for any of your real estate questions!
- Tracy