The CoreLogic Loan Application Database shows there has recently been a net outward migration of homebuyers from the center of the Washington, D.C., metropolitan area to more affordable adjacent counties. Using the same set of data, this post focuses on homebuyers’ composition by generational cohort in the Washington, D.C., area in 2017. (The Washington, D.C., metropolitan area includes the District of Columbia, five counties in Maryland, 17 counties/cities in Virginia, and Jefferson County in West Virginia.)
Among the Washington, D.C., area residents who applied for home-purchase mortgage loans during 2017, Generation X represented the largest share at 41 percent, followed by millennials, baby boomers, and the 'silent' generation at 38 percent, 19 percent, and 2 percent, respectively. (Pew Research Center defines generations born 1981 to 1997 as millennials, 1965 to 1980 as Generation X, 1946 to 1964 as baby boomers, and 1928 to 1945 as the silent generation.)
Figure 1 shows the generational cohort breakdown by jurisdiction for major counties/cities in the metropolitan area. Young homebuyers (millennials) were more likely to buy homes in the core of the metro area–D.C., Arlington, and Alexandria–representing about 50 percent of the potential homebuyers (with 54 percent, 48 percent, and 45 percent of the homebuyers, respectively). Most of these millennials were still unmarried or have no kids, prefer a shorter commute, and do not necessarily need a big home. (About 38 percent of the millennial applicants who applied for home-purchase mortgage loan were unmarried.) About 55 percent of the loan applications by millennial homebuyers in the core area was for condominiums/coops.
In contrast, older homebuyers were more likely to buy in suburbs. Generation X homebuyers were the largest cohort, with more than 40 percent of the potential homebuyers in suburban jurisdictions of Maryland and Virginia such as Loudoun, Montgomery, Fairfax, Prince George’s, and Prince William. This age group often has kids and prefers more space. More than half of the loan applications by Generation X were for single-family homes or townhouses.
Though millennials were more likely to buy homes in core areas, they were buying more affordable homes compared with Generation X. The average home sale price for millennial homebuyers was $428,000, compared to $525,000 for Generation X and $496,000 for baby boomers in the area. Millennials bought more condos compared with the share of Generation X. About 59 percent of the loan applications for condominiums/coop in the core area were by millennial homebuyers alone. Generally, with little savings and lower income, millennials can only afford the lower-priced homes, whereas Generation Xers are trading up and baby boomers and the silent generation are downsizing. About 55 percent of the loan applications for million-dollar houses were by Generation X, compared to just 17 percent by millennials. Figure 2 shows the millennial share of home-purchase mortgage loan applications diminishing as home prices go up.
As baby boomers and the silent generation downsize, more than half of the loan applications by these cohorts in the core area were for condominiums/coops. However, the price of a condominium that a member of the baby boom or silent generation wanted to buy was more expensive compared to the price of a condominium that millennials wanted to buy. The average condominium sale price for a baby boomer or silent generation loan applicant was $587,000 compared to just $437,000 for a millennial homebuyer in the core area. A baby boom or silent generation homebuyer was willing to pay more for amenities in contrast to the millennials.