Gen X & Gen Y: Home buying’s a lifestyle decision, not an investment

Calling real estate “a great investment” is a disconnect between Baby Boomer REALTORS® and the reason their Gen X and Y clients purchase a home, according to national real estate expert Matthew Ferrara.

“Real estate as it exists today was built for Baby Boomers,” Ferrara of Matthew Ferrara and Company, Boston, MA, said. “Gen Xs and Gen Ys are not getting married as young. They invest in what’s important to them and it’s not the same as Baby Boomers.

“REALTORS® should be focusing on what their clients’ needs are and how the property meets their lifestyles. I’ve never seen a comparative market analysis (CMA) done on a residential property that shows it’s a great investment,” Ferrara added.

He admitted that this is a shift in the traditional wisdom of the industry and is a change in how REALTORS® have been trained. “The fundamental challenge in this industry is to remember it’s not about us. We need to get into the customers’ shoes and figure out what’s in it for them,” he said.

Research shows that many Gen Xs have already purchased homes and many have lost what they initially invested in their homes, Ferrara noted. “Gen X is a skeptical generation. They may also be seeing parents who have lost their homes and/or their retirement savings. They see selling their ‘real estate investment’ as weak at best,” he added. “Many Gen Xs are too busy and don’t want to mow the grass and paint the house. There’s a reason so many of them lease cars – the maintenance is included in the agreement and they don’t have to worry about it.”

Gen Ys don’t want to be tied down to a home while they’re still changing jobs, traveling and single. “They want to be where the action is. They get their sense of community from their 1,000 Facebook friends, not where their home is located. This generation is the total opposite of the Baby Boomers who got a job and worked there for 40 years until they retired,” Ferrara said.

Today’s REALTORS® should instead focus on events that make people want to buy a property, he advised. What’s going on in their lives – are they getting married, getting divorced, kids going to college, retiring – what are their needs and what property fits those needs.

“Buying and selling homes is closely tied to personal changes in our lives,” Ferrara said. “All of these changes influence how people live and the types of homes they want to live in. No one is thinking about investing in anything anymore.

“Everyone is waiting for the housing market to get back to normal,” Ferrara said. “It’s possible that will never happen. Not because financial conditions won’t improve but because we’re entering a new normal driven by consumer demographics, not products. Home ownership will likely remain an appreciating commodity but it might attract a different investor – perhaps Boomer landlords who offer short-term leasing to Gen Y, not average individuals.”