Features and Trends

(May 23, 2008)

America's Younger Demographics

Generation X and Y Are the Future of the Housing Market

By Steve Kleber

For America’s younger population, the decline in housing values equates to improved opportunities. It’s imperative to the vitality of the current and future housing markets for those in the home building and related industries to capture the escalating income of Generations X and Y. 

Recent studies show that the younger generations buy homes at three times the rate of older generations, including the baby boomers. Converting this young group as they migrate from renters to buyers is a huge market opportunity.  In addition, a recent study conducted by Harvard’s Joint Center for Housing Studies shows that 20 percent of those who already own a home including recent purchasers (five years or less) are looking to upgrade or change their kitchens and baths. They are also interested in making structural changes and adding rooms as alternatives to trading up.

So, what defines Generation X and Generation Y? What are their motivating factors and purchasing habits? Which marketing strategies and techniques resonate best with these individuals? This article addresses the most sought-after answers to your important questions.

The future of the housing market

Watch out Boomers! Generation X—about 62 million strong—is today’s group to be reckoned with. But right behind them is another vast force of 74 million, Generation Y (second in population only to the Boomers)… who will hit housing and remodeling peaks within the next five years. What's more, this generation comes armed with an average weekly disposable income of $100 per week and spends nearly $150 billion per year.

And of course, these groups behave very differentlyy from their predecessors…

 

Attitudinal traits

Gen Xers, born between 1960 and 1980, are self-reliant, diverse and pragmatic. Described as technoliterate, adaptable, independent, creative and entrepreneurial, this demographic also tends to be less intimidated by authority and isn’t afraid to take chances. Their defining life events and trends include Watergate, Nixon resigning, the fall of the Berlin Wall, the Wall Street frenzy, MTV, AIDS, computers, just to name a few. Also frequently known as the first generation of ‘latchkey kids,’ they have heightened experiences with single-parent homes.

On a similar note, Gen Yers, born between 1980 and 1997, are optimists, moral, stressed, diverse and individualistic. This group maintains a heavy focus on achievement, education, and sociability while recognized to possess street smarts and confidence. They are independent yet collaborative and known as ‘doers.’ They are technologically savvy, entrepreneurial and possess immense multitasking capabilities. They can also be defined as having tenacity, a heroic spirit and immersed in over-planned lives. Their defining life events and trends include computers, the Oklahoma City bombing, TV talk shows, multiculturalism, Girls’ Movement, McGwire and Sosa, Columbine and the Clinton/Lewinsky scandal.

Generation X has a dubious life outlook. They have a firm balanced work/life ethic, are reluctant to commit to relationships and repelled by things that are cliché or mainstream. Generation Y, on the other hand, maintains a hopeful life outlook, possesses a determined work ethic, tends to have inclusive relationships and are turned off by concepts considered immoral.

So, how do these groups buy?

 

Purchasing habits

By nature, Generation X is a skeptical group of individuals who research options thoroughly prior to purchasing anything. Yes, mostof this comparing and contrasting choosing takesplace on the Web.

Growing up with computers, Generation Y is sophisticated in terms of pre-purchasing research. They tend to do their own “homework” before committing to buy. Traditional forms of advertising do not resonate as well with this group. They expect things to come at them rapidly, loudly and via the Internet. Further proof of this trend towards non-traditional advertising methods can be seen in a study from New Paradigm Resource Group, which found that 77 percent of the “net generation” claimed that they could live without television but could not envision a life without Internet access.

Motivating factors

Generation X is a demographic seeking products and services that are ever-changing and that cater to their diverse and individual lifestyles. Customization and upgrading is key to this group. They are also environmentally-conscious and look to buy from companies that demonstrate a genuine concern for our ecosystem, rather than those who are merely seeking a profit. High-quality items with a particular focus on individual style are sought after in so much, this cohort shns brand names which sacrifice "authenticity."

Like Generation X, Generation Y desires a customized and highly personalized offering. Along with Generation X this group loves upgrades. They want products and services that seem to be designed just for them and they are not afraid to pony up the money if the perceived value is in line with the price tag. They have an immense love for technology and zeal for the latest and greatest gadgets. Modern-day companies, products and services that utilize state-of-the art technology find it one of the driving purchasing factors among this group.

So, what are the most effective ways to reach these generations?

Home channel professionals who tailor their marketing strategies to attitudinal traits, purchasing habits and motivating factors, will be the ones increasing their bottom lines as the future unfolds. Providing a multitude of flexible options is essential to capturing the spending dollars of both Generation X and Generation Y.

Marketing techniques

For Generation X, focus on gender neutral marketing. Ensure your advertising resonates with the truth, not exaggeration or “greenwashing”,which is all too common in today’s marketplace. Remember, this is one of the two most advertised-to generations in history (Generation Y being the other) and they judge brands, companies, products and services by how well ‘promises’ are honored. A stimulating and entertaining in-person shopping experience will resonate well with this core demographic.

Generation Y is THE most advertised-to generation in our country’s history. Traditional mass media broadcasts or prepackaged content is less likely to meet their steep expectations and has little chance to influence them to buy. Use of multiple media and networking outlets to create a brand connection is an alternate strategy. Avoid using unconvincing contests, incentives, or advertisement embellishments. Provide marketing strategies that inform this group of their options and alternatives without “telling” or “explaining” to them why your company, product or service is the best. They don’t want to hear about it. They want to feel it for themselves. By creating  innovative brand “contact experiences” you’ll resonate best with them.

Quizzes and other forms of personal learning provided in ways viewed as info-tainment, are a huge hit with this group of young individuals. They are interested in online sharing and other comparative information that is useful, yet unbiased.  A successful example is the Progressive Insurance Web site, which evaluates the competition in a seemingly fair and balanced way. Companies, products and services that flash, dazzle and entertain this group will remain top of mind. They want information readily available and will go elsewhere to find what they’re looking for if it’s not in front of them quickly and with ease of access.

Peer word-of-mouth and viral marketing via social networking, online sharing and other Web sites are vital when marketing to this group. In the case of both Generation X and Generation Y, the Internet is essential to your company’s success. To align with the younger generations, your product or service must be highly visible on the internet.  A great example of innovative thinking is how the hit TV show “The Office” has connected online to reach viewers. They have created a microsite for Dunder Mifflin Infinity, the fictional company for which the cast works. Here visitors can interact with the brand by getting up-to-date news, play games, enter contests and in their own way become a part of the show.

A new future, a new outlook

Overall, the future of the housing market lies in the hands and minds of Generations X and Y. And like it or not, traditional forms of sales and marketing must evolve with this new demographic shift. It’s a new time. It’s a new market. And change is everywhere.

Want to know what K&A can do to help evolve your brand? E-mail sk@kleberandassociates.com or call 770.518.100.

Looking for more consumer trends and insight? Stay tuned to www.kleberandassociates.com for the upcoming release of K&A’s next consumer market research paper featuring Missing Males. Click here to become one of the first to receive your FREE copy.

 

 


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