Gen X to lead US housing market recovery

KUALA LUMPUR: Young families and adults age 31 to 45 will probably lead the recovery in the US residential property market, according to real estate experts.

Dubbed Generation X, this group makes up 32% of home-buying age Americans. They have the greatest mobility with their growing families and careers in full throttle, said John Burns Real Estate Consulting principal Mollie Carmichael in a recent online seminar produced by the US National Association of Home Builders (NAHB) in partnership with Builder magazine.

“They are in full force with their careers and they need to accommodate growing families,” she said.

This group is most likely to be decisive about house buying and are deeply opinionated about the design elements of their new homes, she added.

Though the average home size is shrinking, a majority of prospective buyers said they would like a bigger home than the one they have.

“These are first-time buyers or younger families looking for more room to grow,” she said.

On the other hand, Baby Boomers continue to wait for better market conditions despite constituting the majority of the home-buying population at 41%.
Furthermore, their decision to postpone retirement has also resulted in their decision to delay downgrading to a smaller home, she said.

In a survey of 10,000 buyers and potential buyers in 27 metro areas, sentiments were generally optimistic with 85% to 89% of participants saying it was a good time to buy a home while only 13% expected home prices to continue dropping.

Meanwhile, Bassenian/Lagoni Architects director of marketing Heather McCune pressed on the significance of design in generating sales in the emerging marketplace.

“The notion of ‘build it and they will come’ no longer works. Design matters,” she said.

About 70% of those surveyed said they were willing to pay an extra US$5,000 (RM15,150) for a green home but they also expect new homes to come with green technology.

McCune added that buyers were looking for homes where indoor and outdoor spaces were connected to create the perception of a larger home. They also sought more storage space, an open floor plan and flexibility in the garage.

This is reflected in the survey findings where many prospective buyers — largely first-time homeowners or younger families planning for expansion — are looking for bigger homes.

In addition, 46% preferred homes in a large-lot, suburban development compared with 21% who preferred traditional or “walkable” neighbourhoods.

“While Gen X numbers are smaller than the birth cohorts before and after them, their numbers have been enlarged by steady immigration,” said NAHB chief economist David Crowe.

“Gen X may wait longer than their predecessors to establish their own household or buy a home because of the recent recession impacts, but the trends are still likely to occur as they have for past generations,” he added.

This article appeared on the Property page, The Edge Financial Daily, March 25, 2011.