Realtor.com, the Home of Home Search℠, today released new survey data revealing members of the millennial generation have increased their home buying purchase power and now boast the largest share of new home loans by dollar volume, larger than both Generation X and the baby boomer generation^[1].

These insights, based on a realtor.com analysis of residential mortgage loan originations from Optimal Blue, show that while the median home buying price millennials take on is still lower than that of Generation X or baby boomers, millennials are showing interest in more affordable markets. Additionally, millennials are making lower down payments and taking on larger mortgages when compared to Gen Xers and baby boomers.

"Millennials are getting older, with better jobs and deeper pockets, allowing them to expand their collective purchase power, and hence, their footprint in the market," said Javier Vivas, director of economic research at realtor.com^®. "The stereotype that millennials primarily choose to buy homes and live in large metro areas isn't the reality. Results show millennials' expansion is more heavily conditioned by affordability than in prior years, so their eyes are set on less traditional secondary markets where homes and jobs are now available and plentiful."

Affordability is such a key factor for millennial home buyers that this generation is moving to places previous generations have not, like Buffalo, N.Y., the top affordable market for millennials, according to this study.

Millennials Now Have More Buying Power
Millennials are still primarily in the life stage that requires starter homes. Despite a lower median purchase price ($238,000) than the two generations before them, (with baby boomers and Gen Xers spending an average of $264,000 and $289,000, respectively), millennials are increasing their purchase price at a faster rate than previous generations, indicative of this generation starting to move beyond starter homes.

Since early 2017, millennials have been the largest mortgage purchasers by the number of loans originated, surpassing Generation X as the leader in January 2017. As 2018 came to a close, millennials took on nearly half (45 percent) of all new mortgages, compared to 36 percent for Generation X, and 17 percent for baby boomers.

In November 2018, millennials finally overtook Generation X as having the largest share of new loans by dollar volume, with a share of 42 percent in December, compared to a share of 40 percent for Generation X and 17 percent for baby boomers. This indicates millennials are willing to take on larger mortgages than any other generation to fulfill their dreams of homeownership.

Millennial Home Buying is Driven by Affordability
In addition to increasing their buying power and taking on larger mortgages, the data shows millennials have consistently made lower down payments than other generations since 2015. While other generations have increased their down payments in response to rising prices, millennials have not been able to increase their down payments as much as older generations. Millennial down payments averaged 8.8 percent in December 2018, compared to 11.9 percent for Generation X and 17.7 percent for the more equity-rich baby boomers.

Given that the majority of millennial home buyers are searching for their first homes and do not bring equity from a previous home, it's no surprise they are putting down smaller down payments. This is likely a driver of their activity in more affordable markets, where their money goes further.

Top U.S. Markets for Home Buyers Varies by Generation
Within the last year, millennials have moved to affordable areas with strong job markets where they have more buying power. At the end of 2018, the median price of a mortgaged home purchased by millennials was $238,000, $26,000 less than the median price of a home mortgaged by baby boomers ($264,000) and $51,000 than Generation X ($289,000). The top five markets where millennials now generate more than 50 percent of the mortgages and their share grew by more than four percent are:

1. Buffalo, N.Y.
2. Pittsburgh
3. Milwaukee
4. Cincinnati
5. Columbus, Ohio

As members of Generation X are in their prime income-earning years, they purchased homes in strong job markets and secondary home markets, with five of the 10 markets on the list having unemployment rates higher than the national rate of 3.7 percent. The top five markets where Gen X purchased a large and/or growing share of homes are:

1. Los Angeles
2. Providence, R.I.
3. Bridgeport, Conn.
4. Jacksonville, Fla.
5. Atlanta

Many boomers are retired or rapidly approaching retirement, and therefore, showed a strong preference for buying homes in markets within primarily low-tax states or markets that are lower-cost than nearby metros, presumably to maintain wealth earned during their working years throughout their senior years. The top five markets where boomers made up a large and/or growing share of mortgaged purchases are:

1. Knoxville, Tenn.
2. Sacramento, Calif.
3. Memphis, Tenn.
4. Oklahoma City
5. Riverside, Calif.