The year 2016 was an eventful one for home building.
Cindy Harvey on how Gen X has been misunderstood and overlooked
Copyright Keith Bell
People born between the early 1960s and early 1980s have been categorized as a lost generation steeped in Nirvana lyrics and indifference, but marketers and builders may be ignoring Generation X at their own peril. Cindy Harvey, with more than 20 years of experience working with developers and creating master planned communities, shares her take on why this group can be a formidable force of homebuyers.
Q: Generation X was written off as the group that had its earning and homebuying capacity hurt most by the recession. What’s happened to Gen X since then?
A: Boomers and Millennials stole the spotlight from this smaller generation mostly due to sheer numbers. But Gen X still consists of 65 million Americans and is a significant portion of the consumer market. All generations felt the impact of the recession, but Gen X in particular is wired to recover. Most Gen Xers were in their 30s and early 40s when the housing crisis hit—the time in life when you typically purchase a first home and may even be contemplating moving up. By 2009, many Xers had mortgages that exceeded the value of their home, or worse, were forced to foreclose. The recession hit bottom in Q2 2009 and the ripple effect and subsequent recovery made 2010 feel like a protracted bottom. Gen X lost 45 percent of its wealth, according to a Pew Research report. Xers also dropped nearly 6.5 percentage points in homeownership rates, going from 65 percent to 59 percent during that time—the largest drop of all generations.
However, Gen X is motivated to get back in the homeownership game and shouldn’t be written off. Now in its peak earning years, Gen X is in high demand given the gap created by retiring Boomers. Many builders are focusing on the Millennial market, but the Associated Press recently reported that one-third of all Millennials live with their parents and continue to delay homeownership. Millennials’ homeownership rate is only at 34 percent, according to 2016 first-quarter Census Bureau numbers. In contrast, the National Association of Realtors’ Homeownership Opportunities and Market Experience Survey report notes that Gen X makes up over 25 percent of recent homebuyers. Also, Gen X has an average household income of $104,700, the highest among all generations of buyer types. Gen X also makes up the largest percentage of sellers, at 25 percent, which indicates they are recovering and looking to trade up to larger and more expensive homes. Yes, Gen X has had setbacks, but its future is bright.
Q: What are some other myths about Gen X?
A: Numerous stereotypes and myths abound for all generations. Just as Millennials will have a hard time shaking the “entitled” label, Gen X has had to disprove the “slacker” label. An Ernst & Young study noted that 70 percent of respondents ranked Gen X as the most effective managers compared with managers from the Boomer or Millennial generations. Xers also ranked the highest for possessing traits of adaptability, problem-solving, and collaboration. Millennials are often touted as being the most tech-savvy generation. Mark Zuckerberg is a standout Millennial in that regard. However, Gen X has its share of tech leaders as well, including Jack Dorsey (Twitter), Elon Musk (SpaceX and Tesla Motors), and Sergey Brin and Larry Page (Google). While an Xer hasn’t made it to the White House yet (Obama is a tail-end Boomer, not an Xer), this “slacker” generation is ready to lead—and includes several presidential candidates and Speaker of the House Paul Ryan.
Q: What do they want in a home and community, and do those attributes differ from what Baby Boomers and Millennials desire?
A: A lot comes down to the different life stages for these generations. Boomers are looking to downsize their empty nests and are even gaining interest in urban living. Millennials are in their 20s with less income and fewer commitments; they’re looking for affordability, proximity to work, and social engagement. Gen Xers are in the middle of raising families and many are starting to care for their aging parents. Community selection has a lot to do with access to good schools and convenience to work. As for their homes, they need space, flexibility, and convenience. The average home size purchased by Gen X is 2,200 square feet with four bedrooms as compared to Millennials at 1,720 square feet with three bedrooms. Also in a new study released by the National Association of Homebuilders regarding buyer preferences, energy saving features ranked very high among Gen X.
Q: Does Gen X have a unique design aesthetic?
A: In general, Gen X has an eye for things that are well designed. That can come in many different wrappers. Perhaps what guides the aesthetic preference the most is authenticity. Not only does it look and feel real; is it real? Re-purposing materials or items is appealing for the eco-minded Xer and can provide an eclectic touch. Gen X is a racially diverse group and draws on these cultural influences in their homes as well.
Q: Gen X is most likely to be caring for aging parents while raising children. Do those responsibilities impact their housing preference (multifamily for example) and are homebuilders responding?
A: A lot of the focus has been on Millennials both in the homebuilder world and in the multi-family world. To fit the Millennial budget, homes and apartments have shrunk in size. As mentioned, Gen X is looking for a larger home that can accommodate their children and possibly aging parents. This multi-generational approach to design is appealing but in limited supply.
As this group enters its peak earning years, are they letting go of their cynicism or can you note any changes as a result of being in this stage of their life?
What was likely cynicism in this generation’s youth has evolved to pragmatism. Xer’s have experienced great changes and shifts in their lifetime economically, geo-politically, and technologically. As a result, this is a resilient, adaptive generation. They are also a generation of doers. When they dream big, they get it done too.