This story was originally published in Builder.
This is part one of a four-part series about how builders are catering to Gen X buyers.
In the last four years, at least 11 publicly traded home builders have announced new entry-level brands aimed at Millennials, and another six have introduced new active-adult home brands geared toward Baby Boomers. Despite this push to lure buyers on the upper and lower ends of the home-buying spectrum, none of the country’s public builders have introduced lines aimed at the generation of home buyers in between these two demographic groups.
Known as the “Lost Generation,” Generation X, made up of Americans born between the mid-1960s and late 1970s, often takes a back seat to both older and younger consumers in targeted advertising and products. In a 2015 analysis of companies’ earnings calls with Wall Street analysts, CNBC found that Generation X was mentioned only 16 times in 17,776 transcripts—a lower number by far than Millennials.
Why aren’t builders, retailers, and marketers reaching out to the so-called Forgotten Generation?
For one, it’s the smallest of the main home-buying generations by most definitions with only 65 million members, compared to 74 million-strong Baby Boomer generation and 71 million Millennials, according to Adweek. Members of this demographic engage strongly with both traditional and digital media, according to research by by Millward Brown Digital and Forrester Research, which makes them more difficult to market to than digital-native Millennials and traditional-native Baby Boomers.
Their generation name also has no solid definition, and its reputation for describing “slackers” and “losers” makes it unappealing to advertisers and to the very group it allegedly describes. According to a MetLife survey, only 41 percent of its members identify with the name.
Generation X also occupies a cultural middle ground in many respects between their older and younger cohorts, whose differences are more black and white. This rings especially true on the home-buying end, as buyers in Generation X’s current age group are not as strongly spurred to buy homes by a singular lifestyle change.
According to real estate research firm John Burns’ Consumer Insight Survey, 55 percent of new home shoppers under 35 cite children as the primary reason they are buying a home, while 40 percent cite marriage. Shoppers aged 51 to 69 overwhelmingly move because they are retiring (57 percent), becoming empty nesters (49 percent), or want to move closer to their grandchildren (39 percent). As for buyers in the middle, some are moving because they’ve expanded their families but for the most part their reasons for moving, and the homes that they might want, are more difficult to predict at a glance.
In addition, Gen Xers were particularly hard hit by the Great Recession. Before the foreclosure crisis, Americans born in the 1970s had a homeownership rate 7 percent higher than those born 10 years earlier, according to John Burns. However, just ten years later, the same group’s homeownership rate had fallen to 11 percent lower than those born 10 years earlier.
“They were the ones that bought at the peak of the markets for the most part. So a lot of them did lose their homes to foreclosure, which we know can have a lasting effect,” says Mikaela Sharp, a John Burns consultant.
The economic downturn caused some in this demographic to stay in rental housing longer than they initially envisioned, while others who didn’t lose their homes delayed moving up. However, according to John Burns, many of these same members of Generation X have now entered their peak earning years, and they have a greater pent-up demand to return to homeownership or to enter it for the first time. According to research by Axciom, while Generation X makes up only a quarter of the population, they account for 31 percent of the nation’s consumer spending, and according to American Express they have more spending power than any other generation. They are willing and able to lend some of this spending power to their homes, which they’ll want with enough bedrooms to accommodate growing families and features trending toward attainable rather than affordable.
In fact, Gen Xers have a vision for their perfect house and it doesn’t necessarily have to do with size, says Jenni Lantz, manager of DesignLens.com.
“People aren’t moving because they have to have a bigger house. They’re moving because they want a house that fits them better,” says Lantz. “Something that isn’t just bedrooms and great rooms, but something that really gives them the livability and functionality that they’re looking for.”
At 65 million strong, Gen X home buyers are ready to pay for the finer things in life, and U.S. home builders ignore them at their peril. In the next three installments we’ll look at how to design and sell houses for this ambiguous but lucrative group.
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