They work hard, play hard and have money--and, increasingly, they want to own their own homes.
But how do you design new housing for a group that, in the words of Southdown Homes sales and marketing director Wendy Ney Manley, remains "in search of a cause to unite them?"
That is the challenge faced by builders hoping to tap into Generation X, an age group that the current labor shortage is putting "in the driver's seat," Manley said. Unlike the first-time buyers in the 25 years after World War II, today's first-timers typically buy resales, because older houses are generally less expensive than new ones.
While most residential builders these days target the second-home, trade-up or trade-down buyer, a growing number believe that with the right design and at the right price and the right interest rate, new houses can lure first-time buyers, too.
Jim McAleer, vice president of sales and marketing for Kevin Scarborough Homes in Gibbsboro, Pa., said the builder recently sold out a detached single-family development primarily to first-time buyers, thanks to low mortgage interest rates.
"First-timers would rather have a single than a town house, and could get their dream home as their first rather than second home because the rates were below 7 percent," he said.
The houses were smaller--1,591 to 2,158 square feet, three bedrooms with an optional fourth, and two baths--and ranged initially from $115,000 to $140,000. The range later increased to $125,000 to $170,000.
Although other builders were critical of Scarborough for only offering a one-car garage, "I think first-time buyers are happy to get a detached house and didn't need or couldn't afford a second car," McAleer said. "We tried to make it as affordable as possible without having the buyers sacrifice too much."
McAleer acknowledged that it is getting tougher to build for this market.
"You can't offer a house with just one bath and no kitchen just to make the house smaller and keep the price down." he said. "The cost of land also is driving the price up. We struggle all the time to do housing for first-time buyers, but it's tough."
Generation X--people born from 1965 to 1978--appears to be a target of many residential builders these days. Gen X is, in fact, one of three groups builders will be targeting from now through the first two or three decades of the new century, said Terry McDermott, a vice president of the National Association of Realtors.
The other two are aging baby boomers, born from 1946 to 1964, and the Millennium Generation--those born after 1978.
In the past, if you built for baby boomers, you were successful, McDermott said. "But as the number of more traditional households shrinks, diversity is the key that will open the market."
Although there are fewer Generation Xers than baby boomers, McDermott said, sales will be bolstered by "10 million immigrants and minority buyers, whose home desires will fuel the first-time buyers' market till the Millennium Generation comes up."
What do you build for a group as "diverse and eclectic"--in Manley's words--as Generation X and keep it affordable?
A few generalizations can be made about this group, said Manley of Southdown Homes, which is based in Downingtown, Pa.
"Quality of life is important to them," said Manley, who was moderator of a seminar titled "Nothing Fancy, Ma'am: Home Design for First-Time Homebuyers" at the National Association of Home Builders annual convention in Dallas in January. "They don't want to leave the nest earlier than they have to, because, as my 11-year-old stepson tells me, life is sweet.
"So when they buy, they are looking for things that remind them of home, family and yesteryear--something that acts as a harbor and serves as a link to the past," said Manley, observing that these 21- to 34-year-olds have been responsible for the resurgence of both the disco music of the 1970s and the swing music of the 1930s and 1940s.
All first-time buyers share the desire to have it all, but many times they lack the financial means to buy the features that they have come to expect in their parents' homes. It is the task of builders to help them find the compromises.
Compromises differ from region to region, Manley said.
"In the Philadelphia area, first-floor master bedrooms have wide acceptance only in the active-adult market," she said. The remaining buyers, especially first-timers, just won't accept it "because parents want to be on the same floor as their young children."
In other areas of the country, especially the South and the Southwest, there is no choice. First-floor masters are standard, because single-story construction dominates those markets.
Gopal Ahluwahlia, who is in charge of research for the NAHB, said that in other areas of the country, the living room is dead as part of the floor plan in new construction. But in the Philadelphia market, it is the great room--the combination of living and family rooms--that is the tough sell, according to Manley. "Buyers still demand living rooms, even if they are hardly used."
First-time buyers in the Generation X group see the house as a means of demonstrating their individuality, she said, and this has to be reflected in the design of the exterior of the house.
"We have the option of mixing materials, changing elevations and introducing architectural design elements," Manley said. "The house needs to look like more than just a box."
A house for a first-time buyer is a vehicle of self-expression, Manley said, which can be achieved simply by choosing unusual colors for the front door and the shutters.
"You need to give these buyers a chance to customize," she said. "If you don't, you won't succeed in this market. They want to tweak the floor plan."
Philadelphia architect James W. Wentling, who designs houses for first-time buyers here and elsewhere in the East, agrees that flexible floor plans are important to that segment of the market.
"With larger homes, people can say, 'Oh, we'll make this a den or something else,' but with smaller spaces, first-time buyers need to be given options of how they want to furnish it," Wentling said.
You can offer such options if you use a square in designing a floor plan, he said. A one-car garage can have a second garage as an option; there can be an optional fourth bedroom; the kitchen can have bells and whistles; and there can be flexible areas for storage or a home office over the garage area.
The interest of this Gen-X group of first-timers in the past manifests itself in trim and gingerbread details, and materials that evoke--at least in this area--the look of the Pennsylvania farmhouse.
The streetscapes have to be diverse and interesting, often accomplished by varying rooflines, Manley said.
"How the house is placed on the lot is very important," she said. "You can't just plunk it down on the lot and put a few bushes around it. A builder has to carefully study and plan how the house relates to the other houses on the street, and how the inside of the house relates to the outside."
Another issue for first-time buyers in this group is maintenance--"no one has the time any more, so the key issue is low and no maintenance," Manley said.
"I don't think that it would occur to them to paint their houses, because they see their parents moving away from all that," said Barbara Dennis, a spokeswoman for the siding division of CertainTeed Corp. in Valley Forge, Pa. "They're going to want something that's extremely easy. They're the ones who want to be out with their friends or down at the Shore on weekends partying."
They are also more technologically minded than their parents, so their houses need to be wired to accommodate computers and home entertainment centers. It's something that even those on extremely tight budgets are willing to pay for--and that includes space to keep the high-tech equipment.
"They want the latest and the greatest to play around with for media types of rooms and computer networking," said Cynthia Pawlowski, senior product manager for Lucent Technologies Inc. in Atlanta. "They're the group that knows nothing else but this technology, and they're going to want to be able to use it."
They have "grown up green," Manley said, and this means interest in environmental and energy conservation.
"If you look at the first-time buyer--in their mid-twenties and probably married--they're going to be looking for products that are going to save them money when they heat or cool the home, and that have some kind of environmental appeal," said Alswinn Kieboom, a spokeswoman for Tenneco Building Products in Smyrna, Ga.
These buyers also crave convenience and community. They need to be close to work, schools and restaurants--even though kitchen design is important, they dine out a lot--and they need to be able to sit and talk with neighbors on the street corners or on porches.
The key to the market, Manley said, is for the builder to offer houses that "look like a million bucks, even if they don't cost a million bucks."
"Even though budgetary constraints may limit what these buyers can afford in a house, they must never be allowed to feel as if they are compromising," Manley said.