Any conversation about real estate invariably turns to generations, and Gen X typically is the last one on the minds of many agents. Most attention is placed on the baby boomers’ impact on real estate over the years and the effect millennials will have on housing and the economy.
However, when it comes to any discussion about new-home construction, it is Generation X—those born from 1965 to 1980—who will shape the fortunes of the home building sector.
While this generation is a smaller cohort in size, Gen Xers are increasingly the typical buyers of newly built single-family homes.
Over the last several years, approximately four out of 10 new homes were purchased by a member of Generation X. And this share will rise in the coming years.
While the generation was hit hard by the housing crisis, there are demographic factors that show promise. Gen X households are larger and more likely to have children, 1.1 on average. And their households overall are larger, with 3.1 total individuals on average, compared with a 2.4 household member count for the nation as a whole.
An improving economy, multiple years of strong job growth and the notable increase in home values in most markets also is driving a greater share of purchases from Generation X households over the past year, according to the National Association of Realtors.
According to Lawrence Yun, NAR chief economist, lost in this discussion are the numerous Generation X households who bought their first home, started a family and entered the middle part of their careers only to be rattled by job losses, falling home values and overall economic uncertainty during and after the Great Recession.
Resilient, Gen X is bouncing back and is quickly approaching the peak of its earning years. For households reporting income, the median household income of Gen X now stands above $93,000, while it’s just under $80,000 for the overall population.
“Gen X sellers’ median tenure in their previous home was 10 years, which puts many of them selling a property they bought right around the time home values were on the precipice of declining,” Yun explained. “Fortunately, the much stronger job market and 41 percent cumulative rise in home prices since 2011 have helped a growing number 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.”
According to NAR, the uptick in purchases from Gen X buyers in its 2017 Home Buyer and Seller Generational Trends survey was 28 percent, the highest since 2014 and up from 2 percent from last year.
For real estate agents and brokers focusing on Gen Y, don’t overlook the potential that Gen X can have on your business over the next few years.