Generation X. The name sounds mysterious, unknown, even scary.
Who are these 46 million Americans born between 1964 and 1975, and how are they different from their predecessors, the Baby Boomers? The answers have significant implications in real estate, especially for housing marketers.
So far, no one has pinned down Generation X. This group of mostly twentysomethings has been variously described:
Are they lazy whiners, crying in their ice beer because they were not born in the more affluent era of the Baby Boomers? Or are they hard workers, even though many have had to take low-paying McJobs in a stagnant economy?
Is McHouse in their future? How close are they to attaining the American dream of homeownership?
For now, at least, “Generation X is not a major factor in the housing market,” said Tracy Cross, president of Tracy Cross & Associates, a Schaumburg-based real estate consulting firm. Twentysomethings are more likely to be holed up in Chicago lofts than suburban colonials, he said.
“Perhaps that’s because of delayed earning power. Generation X is staying longer in the rental sector or living at home. They are buying homes at an average age of about 29 to 30, compared to 27 to 28 for the previous generation,” he said.
Leanne Lachman, managing director of Schroder Real Estate Associates in New York City, agrees that Xers aren’t loaded with buying power.
“The problem is not finding jobs and not making much money. Because of that, many still live at home, and about 70 percent (of those that do) are men. It’s hard to pry them out of their parents’ home,” Lachman said.
The income drag is just one of the downsides to life after the Boomers, according to “Generation X,” the 1991 novel by Douglas Coupland that first put the alphabetic tag on the group.
He said Xers have to deal with “lessness: a philosophy whereby one reconciles oneself with dimishing expectations of material wealth” and with “homeowners envy: feelings of jealousy generated in the young and disenfranchised when facing gruesome housing statistics.”
Coupland’s gloomy view of homeownership: “When someone tells you they’ve just bought a house, they might as well tell you they no longer have a personality. You can immediately assume so many things: that they’re locked into jobs they hate; that they’re almost broke; that they spend every night watching videos; that they’re 15 pounds overweight; that they no longer listen to new ideas.”
But Generation X cannot be as neatly and negatively pigeonholed as Coupland suggested. A sampling of Generation X attitudes toward home buying reveals the extent of the problem, but also a diversity of approaches in dealing with it.
Phil and Mary Rinaldi, both 26, are recent buyers at Lakewood Falls in the southwest suburban Romeoville area. They purchased the 1,750-square-foot, three-bedroom, 2 1/2-bath Essex model, priced at $119,900, and moved in in January.
“We looked about a year, at both new and used homes,” said Phil, who works in management at the Builders Square store in Schaumburg. Mary is a teacher working at the YWCA in Addison.
“It’s about a half-hour drive for both of us to our jobs,” Phil said.
They evenutally want a bigger home, but plan to stay at Lakewood Falls for 5 to 7 years.
Phil commented on Generation X: “It’s a myth that young people are not hard workers. Unfortunately, though, it’s harder to get a job today. I see a lot of college graduates who can’t get jobs in their fields, but there are always openings in retail.”
Two other Xers who took the plunge into homeownership are Kirk Foster and Sarah Zidek, both 24, who bought at the Townhomes of WoodBridge in Elgin.
They bought the two-bedroom-plus-loft Dover model at the Westfield Homes development last October.
“We’re both from St. Charles and wanted to stay local,” Sarah said. “This is the only townhouse we saw with a two-car garage. We had both been living at home, and didn’t want to rent and throw away money. We wanted to own something. The townhouse (base-priced from $116,900) was affordable, but a single-family home would have been out of reach.”
Kirk has moved into the unit, but Sarah will live at home until their marriage on June 3. He works at an insurance agency, ITT Hartford, in Naperville, and she is at a public accounting agency, Gleeson, Sklar, Sawyers, and Cumpata, in Elgin.
She commented that Xers are concerned with job satisfaction: “If they’re not happy, they’ll flip around until they find something that is right for them.”
Marge Steineke, west regional manager for Prudential Preferred Properties in Des Plaines, said there’s definitely a difference between Xers and Boomers:
“The Yuppies (in the ’80s) were on fast-track career paths, but the younger generation wants a more balanced life. Maybe they are not as committed to corporate America. They want to have time to ride bikes and go camping. They are into recreation and quality of life.
“In buying a home, they are not looking for a (fast-turnover) investment; they plan to be there for quite a while. They view the home as a sanctuary, and they want to have special areas for entertainment and maybe an office.”
Doug Buster, senior vice president in the Arlington Heights office of Bloodgood Sharp Buster Architects & Planners Inc., said those in their 20s often don’t have much of a choice in housing:
“They buy whatever they can get into. They might be conservative in home selection because they’re not used to the dollars of the Baby Boom generation,” he said.
But when they buy, they want homes that accommodate the needs of two working partners. Because they may both be getting ready for work at the same time, “we’re seeing double work stations in kitchens,” Buster said.
Another dual-income development, he added, is his-and-her showers-a single shower with dual heads. The arrangement speeds up morning showering.
The National Association of Home Builders agrees with Buster’s emphasis on the need for designs for two-worker households.
The association’s “Future of Home Building” booklet states: “Increasing participation by females in the labor force… will generate more demand for homes that accommodate the time-constrained lifestyles of dual-earner couples.”
In fact, Chicago Title and Trust’s survey, “Who’s Buying Homes in America,” reports that more than 85 percent of first-time buyers in the Chicago area in 1994 relied on two incomes, though only 66 percent were married.
The study also said that Chicago’s percentage of first-time home buyers was 43.3 percent in 1994. The average age of first-time buyers was 30.9 years, putting them at the upper edge of Generation X.
“The American dream has always been to own your own home, but today’s young people have lower economic expectations and less opportunity to achieve the lifestyle of their parents,” said John Johnstone, professor of sociology at the University of Illinois’ Chicago campus. “This slows down their ability to buy a home-five years or more.”
“A middle-class lifestyle can’t be maintained with just one income. Only 1.8 percent of 18-year-old women think they will be staying at home at age 30. More women working could affect the type of housing we’ll need in the future,” he said.
Michael Schall, vice president of sales and marketing for Schaumburg-based Sundance Homes, confirmed that two incomes are needed to buy new homes in today’s market.
“Both incomes are required to qualify for a mortgage,” Schall said, noting that the combined incomes of first-timer buyers is about $47,000. Twentysomethings account for about 55 percent of Sundance sales.
“They’re heavily influenced by their parents’ house in both design and amenities. But a large lot is not important to them; they don’t want to spend a lot of time maintaining a lawn. Their focus is on lifestyle,” he said.
“Xers are looking for homes with good resale value because they may want to move to a larger residence in three years or more. They select value-adding options, such as basements, rather than glitzy extras.”
One Chicago area builder that already has tailored new housing to the limited pocketbooks of Generation X is Hoffman Estates-based Lakewood Homes.
The company’s Lakewood Falls subdivision, where the Rinaldis bought, offers duplexes starting at $83,900 and single-family homes at $105,900. David Russo, executive vice president of Lakewood Homes, said that about 70 percent of Lakewood Homes buyers are under 30.
But some Xers believe bigger is better, according to Mara Solano, project manager for Wheaton-based Robin Hill Development Co. She observes Generation X from the inside; at 26, she’s one of the group.
“People in their late 20s and early 30s who grew up in upper-middle-class families want it all now. They’ve gotten accustomed to a certain lifestyle and want the four-wheel-drive vehicle, the country club and the other amenities.
“They refuse to buy a starter home. Instead, they stretch to the absolute limit to buy a big house. It’s more an image thing.
“They can’t afford it, but they buy anyway. They spend it all and may not be able to afford furniture for two years. Some couples with no kids will choose a four-bedroom home.”
Steve Hovany, president of Strategy Planning Associates, a Schaumburg-based firm that tracks home sales, said the expectations of Generation X stem from their experiences growing up:
“They judge the world from where they came from, and they are used to living in homes with a lot of room. They want what their parents had and are disappointed when they can’t get it.”
“Twenty or 30 years ago the average home was a 1,200-square-foot ranch. Today most townhouses are bigger than that. Xers wonder, `How can anyone live in a house that small?”‘
In order to balance their limited resources and unlimited expectations, Xers have been forced to become savvy buyers.
Tony Albachiara, division sales manager for Centex Homes, based in Hoffman Estates, said that five years ago most consumers would buy a new house and then not see it again until after closing.
“Now buyers are much more educated and consumer-oriented,” he said. “They want to observe the process of home construction.”
But Xers are definitely attracted by a with-it look in model homes.
Shelly Barrad, founder and president of Shelly Barrad Designs Inc., a Chicago-based interior decorating firm, said model homes aimed at young, first-time buyers feature hot, bright colors.
“Also, we want models geared for Generation X to look affordable and attainable,” she said.
