Generation X Posed To Help Stalling Market

(Our housing market is dependent on a lot of different factors; from the economy and jobs, to the buying trends of specific age groups. )

The Baby Boomers have been making news in the real estate industry lately, because many are wondering what their next real estate moves will be as they enter into new stages of their lives. And since they make up such a large portion of the population, many are eager to see how their buying trends will affect the housing market.

But now, as Baby Boomers are getting older, the generation following behind them is making waves in the housing market.

This next age group, Generation X, is starting to become a powerful force in the real estate industry as they begin to buy property in large numbers.

But their wants and needs are different from generations of the past, so it will be interesting to see how home builders and the market itself bends towards the needs of this powerful generation.

A November 7, 2006 article by Kristen Gerencher of MarketWatch and posted on The Wall Street Journal's Real Estate Journal, "Generation X may boost sagging real estate market," discusses the buying power of this unique generation.

"The housing market may be in a slump, but the industry's long-term trends look promising as younger generations begin to buy and trade up. That was the consensus among a group of consultants, analysts and developers speaking at the recent annual meeting of the Urban Land Institute in Denver."

"Rising affordability concerns in some home and rental markets remain a challenge, but the generations coming up behind the baby boomers are giving home builders a run for their money, experts said. With more immigration and people living alone, demographic shifts are pressing developers to reconsider what's worked in the past."

Generation X is defined as people born between the years of 1965 and 1979, and they currently make up more than half of the market for newly built homes, which is an overwhelming amount, according to James Chung, president of Reach Advisors, a Boston-based marketing strategy and research firm.

"'Generation X is in the heart of their entry-level home-buying years and are just now entering their peak trade-up years,' Chung said. 'They haven't yet stolen the thunder of the boomers when it comes to trade-up homes. It's a big shift coming up for home builders and developers.'"

Many analysts believe that home builders are going to have to develop new types of homes since Generation X has different needs in a home than their predecessors.

"The market has yet to catch up with their particular demands, he said. 'What we're seeing is a fundamental mismatch between what these buyers are wanting and what the market is offering. They're settling for what's available vs. finding what they really want.'"

One notable difference is that many people from this generation live alone or without a spouse. "The portion of people living without a spouse or roommate ballooned 23% since 1980, he said. Only 22% of households were made up of a single person living alone 26 years ago compared with 27% in 2005."

As Generation X continues to be a driving force in the real estate market, we will see how the market changes to fit their needs.

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