Young buyers set home market trends

According to a May 19 NAHB news release, households headed by individuals 27 to 40 years old – members of Generation X – and individuals born after 1979, part of the echo boom, bought the majority of new housing on the market in 2003.

American Housing Survey data from the U.S. Commerce Department shows that, while households headed by those aged 27–40 accounted for 28 percent of all U.S. households in 2003, they were responsible for 49 percent of new-home purchases that year. Another 6 percent of newly built homes were purchased by echo-boomers, 33 percent were purchased by baby boomers and 12 percent were purchased by seniors age 60 and up.

“A new generation is viewing the housing market from an entirely different perspective than the baby boomers who’ve traditionally dominated industry trends,” said NAHB Executive Vice President and CEO Jerry Howard. “They’re techno-savvy and are more likely to be house shopping on the Internet. They have a strong awareness of all their options.”

Gen-Xers in particular are wielding their buying power to shape today’s new-home characteristics and market trends.

Consumer preferences

NAHB research on consumer preferences indicates that 37 percent of Gen-Xers and 27 percent of echo boomers intend to buy homes in the next two years, compared to just 13 percent of baby boomers and 6 percent of seniors.

“Previously, there was speculation that younger buyers would be more thrifty than their parents with respect to their housing choices, but our research shows just the opposite is true,” said NAHB Director of Research Gopal Ahluwalia.

In fact, many overwhelmingly favored options support the idea of a “move-up mentality” for younger buyers. For example, both echo boomers and Gen-Xers say they would like to have a home that is about 50 percent larger than their current residences. This compares to seniors and baby boomers, who want only 17 percent and 22 percent more space, respectively.

Similarly, 91 percent of echo boomers say they would like their next home purchase to be a single-family detached home, versus the 46 percent who currently live in that kind of house. Seniors, on the other hand, are more likely than any other group to want to buy a townhouse rather than a single-family home – though most still prefer the detached option.

Luxurious living

Other housing preferences of younger buyers also show the inclination for a more luxurious lifestyle. For example, 61 percent of echo boomers and 67 percent of Gen-Xers say they would prefer to have four or more bedrooms in their next houses, compared to 40 percent of baby boomers and 26 percent of seniors. Similarly, younger buyers show a much greater preference for high ceilings that lend a greater sense of volume and spaciousness to a home.

Fully 73 percent and 77 percent of echo boomers and Gen-Xers, respectively, indicated that they want nine-foot or higher ceilings on the first floor, compared to 65 percent of baby boomers and 54 percent of seniors. In terms of high-tech amenities, echo boomers are more likely than any others to want home theaters, automated lighting controls and built-in security systems.

“In all, we find that the preferences of younger buyers tend toward greater space and more sophisticated amenities than those of their forebears,” Howard said. “Incorporating these preferences in homes that new buyers can afford will be our industry’s challenge going forward, just as tracking these evolving trends will be an ongoing challenge for NAHB.”