Millennials Impact Housing Market As Baby Boomers Follow Close Behind

The Pulse of Housing Demand: Millennials and Baby Boomers Together

In recent years, the housing market has seen substantial shifts, largely influenced by two significant generations: millennials and baby boomers. According to Zonda's annual Baby Chaser Index, the dynamics between these groups are intricately connected as they shape housing demand across the United States.

Millennials: The Largest Living Generation
Currently, millennials are a driving force in the home-buying sector. They represent the largest living generation, presenting a unique set of preferences shaped by their life experiences, economic circumstances, and evolving family structures. The data shows that millennials are increasingly seeking affordable housing options that also accommodate their growing families. However, a recent report from the National Association of Realtors highlights that their share of home purchases decreased from 38% in 2023 to 29% in 2024. This sudden drop raises questions about affordability, especially in environments where rising rates make home buying more challenging.

Baby Boomers: A Wealthy Backdrop
Paralleling millennials' trends are baby boomers, many of whom are looking to retire near their children and grandchildren. This inclination often involves a reallocation of wealth and assets, as boomers possess a significantly large share of overall wealth compared to younger generations. In fact, they accounted for 42% of home purchases in 2024, utilizing home equity to secure properties in today's market environment. Their migration patterns often follow their millennial children, further intertwining these two generations in real estate trends.

Intergenerational Migration and Housing Trends
The Baby Chaser Index emphasizes the ongoing intergenerational migration impacting housing dynamics. A striking 25% of baby boomers expressed desires to retire near younger family members, prompting several shifts in market trends across various regions. The growth in simultaneous moves from baby boomer parents towards their millennial children is reshaping the housing landscape, creating a new narrative of demand.

Recent rankings revealed surprising shifts in the housing market, especially in fast-growing locations. For instance, Orlando has replaced Austin as a leading market, buoyed by significant millennial growth despite economic challenges in the Sunshine State. Particularly noteworthy is Orlando's triple growth rate for millennial residents year-over-year, which has propelled it to the top rankings.

Texas maintains a hegemonic status in housing markets with major cities like Austin, Dallas, and Houston dominating the landscape. Interestingly, San Antonio has surged back into the top 10 list by reflecting accelerated growth among both its millennial and boomer populations, signaling a robust interactivity between these generations.

Additionally, cities that once held stronger positions have witnessed declines. For example, Oklahoma City has dropped out of the top rankings to the 20th position, as its demographic patterns fail to match the vigor observed in other municipalities. Meanwhile, Raleigh is cementing its presence among the top three due to noticeable growth in its boomer migration rates, doubling since last year.

A Forward Path
The narrative surrounding intergenerational migration is steadily evolving, marked by complexity and localization. As economic conditions fluctuate and new generations step forward, Zonda’s tools, such as the Baby Chaser Index, will continue to provide insight into where housing demand is heading and what drives it. Understanding these trends is essential for stakeholders in the housing market, especially as Generation Z begins to emerge and position itself within these dynamics.

In summary, monitoring the patterns of millennials and baby boomers is crucial to anticipating the future of housing and real estate markets across America. With their growing presence, these two generations will undoubtedly shape the landscape for years to come. As homebuilders, real estate agents, and prospective buyers navigate this intricate web of demand, Zonda remains committed to offering comprehensive data-driven insights to empower smarter decisions across the housing market landscape.