Below is an infographic from the National Association of Realtors®
As a baby boomer I get confused on the generations that have followed me, so I'm going to list them:
- The Lost Generation - born 1890-1915 - I don't remember this generation, but my grandparents were in it - both are gone
- The Interbellum Generation - born 1901-1913 - I didn't realize generations could overlap
- The Greatest Generation - 1910-1925 - more overlapping - my parents were in this one
- The Silent Generation - 1923-1944 - my parents were also in this one
- Baby Boomers - 1945-1964 - My husband and I are in this one
- Generation X - 1961-1981 - My daughter & one son are in this generation
- Generation Y - Millenials - Gen Next - 1975-1995 - more overlapping years - my daughter & both sons fall into this
- Generation Z - 1995-2015 - my grandkids are in this
So I'm wondering what the next generation will be called or if they'll just add to Generation Z. I'll have to do more studying as I didn't know any generations overlapped and I haven't heard of most of the older ones prior to the Baby Boomers. Not all lists of generations you will find will have those overlapping groups. I already lost the page where I got this list but it's interesting so I'll leave it.
Largest Group of Home Buyers
Although we don't ask the age of our buyers (we don't see their mortgage applications) I'm guessing most of my buyers have been Millenials, as the infographic suggests. I do work with older buyers and sellers but I'd have to guess most of my buyers fall into the Millenial generation, which overlaps with Gen X. I work with many older sellers who are not buying anything else. They're either moving in with children or a retirement/nursing facility.
Suburbs Still Win
Since I'm located in the suburbs they are my specialty areas. The Judy Orr Team has sold properties in the city of Chicago, including near north and downtown, but we sell real estate in the suburbs most of all, and to buyers of all ages.
We have young relatives that bought in the city and are now renting a place in the suburbs since they had a child. They're renting to make sure they like the area and I'm not sure how much equity they have in their current place. I just sold a Palos Park home to a young couple who have a condo in the city and want to set down roots in the suburbs. They will keep and rent out their Chicago condo.
It almost sounds like a typo in the infographic - not sure why it would take older generations longer to save for a down payment vs. younger buyers. Most older buyers have enough equity in their current homes and they use that to purchase their next one. In fact, many older buyers downsize and pay less for their next home than their current one is worth and many times purchase their last place with cash. Am I reading it wrong?
A couple of my last sales were young buyers who had 20% down payment. That is rare in my area. I work with a lot of first time buyers that can only purchase using FHA financing, which requires a minimum 3.5% down payment and allows more leeway for credit scores and debt vs. income ratios. The only problem with FHA is that you have to pay MIP (mortgage insurance premium). Prior to the most recent change, you cannot stop MIP for the life of the loan, even when you have 20% equity. So now if you feel you've reached that point you'll just want to refinance using conventional financing and you won't have to pay that any longer.
Keep in mind, even with conventional financing if you put less than 20% down you have to pay PMI (private mortgage insurance). However, when you've reached 20% equity (you might have to pay for an appraisal), you can have your lender cancel it.
No matter what generation you fall in, we'd love to work with you to buy and/or sell a home (or condo, townhouse, income property, etc.). Give us a call at 708-536-8200 or use our Contact Form.