For many years, whenever economic forecasts were made for the housing industry, attention was focused on the preferences and choices of
the once dominant Baby Boomer generation. Now the attention has shifted to include the Millennials, a sizable group that is finally demonstrating a strong desire for home ownership.
In between those two generations falls the often-overlooked Generation X, people born between 1965 and 1979. Gen Xers were just entering first-time homebuyer ages as the price of housing peaked. Then the 2008 crisis hit and home values dropped drastically. Many Gen Xers were caught in the struggle of having to pay off mortgage balances that surpassed the value of their homes. For this reason, they found it almost impossible to sell their start-up homes and move up to larger residences. And if these young adults also lost their jobs during this difficult time period, which was a common occurrence, they were often forced to go into foreclosure and turn to renting instead of homeownership.
Today, many Gen Xers (between 37 and 51 years of age) are still affected negatively by the Great Recession and its aftermath. Typically at this time of life they would be purchasing their second or third homes. Instead Gen Xers who have been renting for several years are challenged to save money for down payments so they can reenter the housing market as first-time homebuyers—for the second time around. Continued student loan debt (typically $30,000) can be a deterrent to saving for that down payment, however the ever-increasing rental costs are helping boost Gen Xer’s motivation.
Hope is rising for Gen Xers according to the National Association of REALTORS® 2017 Home Buyer and Seller Generational Trends Report. Gen X buyers are currently in their peak earning years, which means their incomes, at a median of $106,600 per year, are the highest among all the generations. Lawrence Yun, NAR chief economist said, “Fortunately, the much stronger job market and 41 percent cumulative rise in home prices since 2011 have helped a growing number (of Gen Xers) build enough equity to finally sell and trade up to a larger home. More Gen X sellers are expected this year and are definitely needed to ease the inventory shortages in much of the country.”
The NAR report lists the Gen X demographic as making up 28 percent of homebuyers last year, which was a higher number than the 26 percent from 2016. Even though Millennials were the largest group of homebuyers in 2017, their overall share was down from a year ago. It makes sense for professional builders in Georgia to pursue selling new homes to the Gen Xers residing in our state.
1. New Single-family Suburban Homes The National Home Builders Association (NAHB) in its
study Housing Preferences
of the Boomer Generation: How They Compare to Other Home Buyers provided more detailed insight into the preferences of Gen Xers as they hunt for their perfect new home. Typically, they are searching for newly built detached single-family homes in a suburban location. Home prices were skyrocketing as members of this generation graduated from college and got their first jobs. Gen Xers typically started out buying homes or renting in the city close to their places of work so they could use public transportation and save money. Their homes tended to be small fixer-uppers with one or two bedrooms, which was all that was affordable to them at that time.
Today, most Gen Xers have little inclination to stay in the city and are flocking
to the suburbs. Joel Kotkin and Wendell Cox report in a recent Forbes article Generation X’s Moment of Power Is Almost Here: “Since 2000 the percentage of Xers living in the urban core has dropped by one percentage point, while the percentage living in new suburbs and
exurbs has grown by six percentage points.” They go on to say that these statistics are not all that surprising, since people in every age group tend to head to the suburbs
after they start their families.
Now that Gen Xers have families, they want to move to where they can enjoy having a big back yard, a two or three-car garage instead of parking in the street, and plenty of beautifully landscaped space between the houses. They usually search for a better school district, a family-friendly neighborhood with access to parks, one-stop shopping centers, and a safer community They look for homes with outdoor living spaces, such as patios and porches, where they can gather and relax out in the fresh air with their family and friends.
2. Larger Homes for Bigger Families
Most Gen Xers have children living at home—62% of these buyers have one or more children under the age of 18 years living at home, 30% have two children under 18 years at home. In general they have larger households than other generations and therefore are looking
for a few more bedrooms. They would like space for