Millennials have been driving the torrid home sales market over the past year as they left cities in search of new homes.
In all, millennials were responsible for more than 60% of rising total home sales in 2020, according to CoreLogic.
Of the 4.75 million home purchases reported in 2020 Home Mortgage Disclosure Act (HMDA) data, approximately 1.78 million homes were acquired by young millennials. The cohort’s home sales grew 15.8% since 2019 and are outpacing all other age cohorts. However, in 2019, young millennials’ homeownership acquisition grew only 3.4% and lagged behind older millennials or their parents and the baby boomer generations.
Before the pandemic, millennial buyers made up 35% of all homebuyers. In 2020, the share of millennial buyers rose to 37.4%. At the same time, other age cohorts had flat or declining participation rates.
The HDMA data excludes cash transactions. In 2020, about 30% of all purchases were cash transactions, falling three percentage points from 2019, according to CoreLogic. It notes that cash transactions are less common among millennial buyers than non-first-time buyers, such as baby boomers.
The states with the fastest rise in millennial buyers were Connecticut (a 28.2% growth rate over 2019), Oregon (21.6%), Alabama (21.2%), Arkansas (21.2%), Georgia (20.5%), Montana (20.5%), Arizona (20%), and Illinois (19.8%). West Virginia (9.3%), Wyoming (8.5%), Pennsylvania (7.9%), New York (6.6%), and Hawaii (5.0%) had the smallest increases.
CoreLogic says that more than 75% of rising home sales are driven by an acceleration in millennial purchases. For example, in Connecticut, millennial buyers drove a 23.3% rise in statewide home sales, the highest among all 50 states. In addition, in states with flat or declining home sales, such as New York and Hawaii, millennial home buying has helped offset an overall weakness.
CoreLogic says that lasting changes in remote work flexibility in the post-pandemic economy should continue to propel millennial home buying. In addition, it says that peers and social media will influence whether or not millennials are considering buying a home or the proximity of its location. “Multiplications of potential herding behaviors among the millennial buyers will likely shape the housing market in the years to come,” according to CoreLogic.
Not surprisingly, millennials are also driving sales in the nation’s ten hottest zip codes, according to Realtor.com.
More than seven out of 10 millennials (73%) aged 35-44 own homes in these areas versus their national average of 57%.
Realtor.com noted half of the top 10 ZIPs have older millennial homeownership rates that beat or meet the national average, including: West Irondequoit (ZIP 14617) at 85.8%, Brentwood (ZIP 27616) at 67.3%, Farmington (ZIP 48336) at 65.7%, Milford (ZIP 01757) at 58.9% and Peabody (ZIP 01960) at 57.9%.
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