With more millennials entering prime homebuying ages, the generation’s share of overall U.S. mortgage originations grew annually from 43% to 46% in the third quarter of this year.
That’s according to Realtor.com’s most recent Generational Propensity Report, which affirms that millennials — who already occupy the largest share of the mortgage market — are carving up an even larger slice of the pie. In comparison, the shares of Generation X and baby boomer mortgage holders continued to decrease, with Gen Xers dropping from 37% to 35% and boomers receding from 18% to 17% on a year-over-year basis.
The shift already is having a sweeping impact across many metro areas.
“For the first time, we’re finally seeing evidence of millennials outcompeting older generations in more markets than not,” said Javier Vivas, director of economic research at Realtor.com. “If millennials continue to grow [their market share] at this pace, we expect them to buy more homes than Gen X and baby boomers combined in the next year.”
The millennial share of the overall dollar volume of originations also continues to grow, reaching 44% in September 2019. That’s up from 40% at the end of September 2018, when millennials first surpassed Gen X to occupy the largest share of the market. The Gen X dollar-volume share decreased from 41% to 39% during the same period, while the baby-boomer share declined from 17% to 16%.
The ascent of millennials’ share can be explained in part because their associated home-purchase prices also are growing fast. The median price of a primary residence purchased by millennials jumped to $250,000, a 6% increase compared to September 2018. In comparison, Gen Xers and baby boomers increased their median purchase prices by 5% and 2%, respectively.
A considerable price gap still exists, however. The median purchase price for Gen X homebuyers was $49,900 more expensive than the median price for millennials during the third quarter of this year. The median purchase for a baby boomer was $19,900 more expensive than that of millennials, although that gulf has shrunk. At the end of third-quarter 2018, the gap was $27,800.
Millennial downpayment percentages also grew in third-quarter 2019, with the average downpayment of this generation up 9.1% annually, an increase from the 8.8% year-over-year growth seen in third-quarter 2018. It was the first growth for millennials’ downpayment percentage in 16 months. On the other hand, the downpayment percentages for Gen Xers and boomers decreased by 29 and 20 basis points, respectively.
The moderate uptick in downpayment percentage for millennials, however, didn’t exceed the pace of home-price growth, which helped push up the median loan size for millennial buyers. Millennials took on a median mortgage balance of $231,590 in September of this year, up 7.3% annually. That’s higher than the annualized growth for both Gen Xers (4.4%) and boomers (4.4%).
