X Marks the Spot as Younger Buyers Put Down Roots With a Place of Their Own

The Washington Post
Author: Caroline E. Mayer
Oct 11, 1997

John Funge, 26, spent an entire Sunday analyzing his finances and all sorts of investment options before he decided to buy a town house in Ballston in April.

"I wanted to make sure a house was a really solid investment," said Funge, who now rents out part of his three-bedroom home as part of his investment strategy "to get money back faster."

Suzanne Duryea, 31, and her husband, Tim Waidmann, 32, scoured the Internet for school data before they bought their Silver Spring home this summer. With their 23-month-old daughter in mind, they also had their home tested for radon and lead -- even testing the water -- before they agreed to buy it.

Karen Creedon, 31, used to get laughed at by real estate agents when she told them she wanted to buy a single-family home in North Arlington, near a Metro station, for about $150,000.

But Creedon persisted, spending at least eight weekends driving around until she found the house she wanted. When she thought the price was too high at $159,000, she waited another two months before buying the house for $149,900 in June.

"If you want something bad enough, you go for it," Creedon said with smug satisfaction as she sat in the house she moved to in August.

Financially conservative, computer-minded, environmentally conscious and above all determined -- Funge, Duryea and Creedon represent the home buyers of Generation X, as the group of 20- to 32-year-olds are now called.

Just coming into their prime buying years, Xers approach the home-buying process far differently than their predecessors, the baby boomers, who range in age from 33 to 51, real estate officials report.

As Pat Hiban, an associate broker with Re/Max Advantage Realty in Columbia -- and at the age of 31, an Xer himself -- noted: "Xers are generally very savvy and astute consumers. They are very careful in their decisions and very knowledgeable about their issues. They have more of a need to be in control and get involved."

While there are exceptions, Hiban said the older buyer generally lets agents pick the houses to see. A typical Generation X buyer, on the other hand, would rather have a list of all the possible sites to visit and then call the agent and tell them which houses he or she wants to visit.

"The Generation Xers keep you on your toes," said Carol Greco, an agent with the Long & Foster Realtors office in Annandale.

"They don't want to look at 10 million houses; just the 10 best. They don't want their time wasted; they want somebody who will take care of their needs and do it professionally," she said.

It's not that Xers are impatient; it's just that they've grown up with television and its fast-paced shows and buy-it-now commercials, said Alexander Jutkowitz, a partner with Global Strategy Group, a Manhattan strategic research firm that specializes in the younger generation.

"This is the television generation; it's a whole set of people that has basically been inundated with marketing and targeted efforts to get their attention. Their attention span is just not there. Their attitude is: `Show me, tell me, get in, get out and don't bother me, I'll call you.' "

Compared with their older counterparts, the Xers have been a little slower to enter the real estate market. The average age of the first-time home buyer is now 32, compared with age 29 just 10 years ago.

One reason is economic; many Xers haven't saved enough money to make a down payment. But Jutkowitz also noted a wariness among the Xers that didn't exist a decade ago among the home-buying boomers.

"They've been a little slower to enter the real estate market because they've seen a downturn in real estate values. They tend to be more aggressive investors in the financial markets than in real estate," Jutkowitz said.

For boomers, "owning a house was a dream; for Generation X, it's necessity," Jutkowitz added. As a result, the decision to buy a house "is a little more transactional; they look at the {financial} numbers and where they're living now and see if they can do better" owning their own house.

Xers are much more bottom-line oriented, real estate agents say. In fact, agents note, if you ask recent young home buyers about their purchase, the odds are good that the first reason they give for buying a home will be an economic one.

Roger Constantin, 31, for example, bought a house in Herndon with his girlfriend because "we wanted the tax shelter."

Bill Spier, 30, and his wife bought their Elkridge home "to get some equity."

Creedon decided to move after living in an apartment complex for eight years. "I realized with what I was spending on rent, I could be owning a place."

Creedon's persistence in finding just the right place is not unique among Xers.

"They know what they want and the features of the house become uncompromisable," Hiban said. "With older buyers, it may be okay for them to not have a garage, but with the younger buyers, if they want a garage, then you don't show them anything without a garage. Generation Xers are more firm in their requirements and not apt to give up until they get what they want."

Their tenacity applies to price as well as features. In some cases, agents say they have seen Xers walk away from a house where the price has been cut significantly by the seller but still is slightly more than the buyer wanted to pay.

"Xers are very aware of what they can afford," said Liz Brent, an agent with Taylor Real Estate Inc. in the District -- and an Xer herself at the age of 32. "They do the numbers themselves and even if lenders say, `I can lend this amount,' if they are not at that comfort level, they'll say, `No thank you.' "

Ron Sneyder, an agent with Re/Max Xecutex, recalled a deal in which the seller and Generation X buyer were $2,000 apart on an $89,000 condominium. "It was not the deal of the century, but I thought it was a decent deal," Sneyder said. "I think anyone else would have agreed to split the difference. But the buyer walked away."

Sometimes, this resolve works to the buyer's advantage, Sneyder added. "Another Xer buying a very expensive home was very firm in what he offered and the seller finally gave in and came down in price."

Yet, in their determination to get the best price, Xers are sometimes "penny-wise, pound-foolish," said Phillip T. Grisdela, vice president of First Union Mortgage Corp.

"They are always looking for the lowest rate. To get that, they often pay extra at closing to lower their monthly mortgage payments -- even though it will take them five years to recoup the upfront costs.

"Let's say they want a $150,000 loan and they have a choice of a 7.75 interest rate with no points {each point equals 1 percent of the loan amount} or a 7.25 rate with two points. The first gives you a monthly mortgage payment of $1,075; the second, $1,023. The difference in payments is $52; it would take 58 months before they'd break even with the $3,000 they have to pay upfront and they more than likely won't have the loan for five years or won't be in the house for five years. No matter how much you explain it, they still want lowest rate," Grisdela said.

Hiban has seen that happen often. "Xers are very much focused on the monthly payments -- on their budget," he said. If the payments "fall within their budget, it's good. If they're even $15 to $20 over, it could kill the deal. So they are willing to pay some points" upfront. And often times, that money comes as gifts from parents or grandparents, Hiban noted.

The Internet also is important to Xers, added Hiban, who said he has sold five houses through his Web site.

Sneyder, whose clients are predominantly Xers, recalled one buyer who a day before his scheduled house-hunting tour "went through the Web site, searched out all the houses and then asked me to see the seven listings he found."

Like Hiban, Sneyder also has his own Internet site, which he said gets "800 hits a week. About 40 percent of my new business has come from the Internet site," Sneyder said.

A lot of Sneyder's clients like to communicate with him through e-mail. That's why Michael Mangold, 32, chose Sneyder as an agent. "I saw his newspaper ad and noticed he had an e-mail address. I'd rather correspond with someone by e-mail than voice mail. It's easier to choose your words."

Thanks to the Internet, "by the time Xers come to us, they've already done their research on how to buy a house," said Stephen Israel, president of Buyer's Edge, a buyer-only brokerage firm based in Bethesda.

"As a group, they do more research than anybody else," he said. "A great many of them take the time to do master plan reviews -- go to their local park and planning departments and study all the maps related to existing and future road improvements, changes in utilities, etc."

They also are more likely to have environmental tests done, Israel said. "I don't think we have had any single or married Xer not do a radon or lead test; a lot of older buyers are much less concerned about radon and lead."

In some ways, the younger buyers have the same demands and criteria as older ones, Israel said. "People with kids are still as concerned about schools as older people. But what's interesting is how plugged in they are to that issue through the Internet."

Many Xers say it's facts that count -- not close, friendly relationships with an agent or elaborate marketing gimmicks.

Funge, for instance, deliberately selected his agent for her businesslike attitude. "By training, I'm an engineer, so I tend to be hyper-analytical and very value-oriented. I don't like a lot of the fluff."

When Funge was just browsing at houses -- attending open houses but not yet seriously in the market, "I used to get all sorts of marketing material -- pictures, ornate cards, handwritten notes."

In the end, he selected an agent he had met at an open house because of her no-nonsense, efficient approach. Even her business card was "very plain, black and white, nothing fancy," said Funge, who noted that it didn't have her picture, although most agents' cards do.

In fact, many Xers say they intentionally stay away from agents who post their pictures in their ads or on their cards.

"I see a picture on a card now and I immediately think, `There is no way I'll do business with that person,' " said Ted Jenkin, 28, who bought a house in Bethesda. "It just seems less professional."

Sneyder, 34, heard that comment so often from his clients that he dropped his picture from his business cards.

For longtime agents who have grown accustomed to building lifetime friendships with older buyers, this new business-like approach is hard to adjust to.

"I'm used to going to settlements where at the end, there are big hugs and you feel like you have a friend for life," said one Northern Virginia agent who declined to be named. "I'd go to my clients' dinner parties, their baby christenings; that's the way I worked. But with an Xer, at the end of a settlement, it's `Thank you and goodbye.' "

That's certainly how Jenkin felt at his settlement. Although he liked his agent -- and has referred several friends to him -- he said, "I could care less if he calls me. I don't need him to be my best buddy -- just as long as he does a good job."

Some agents also say that there is a large degree of distrust among the younger buyers.

As another Northern Virginia agent who also declined to be named said: "These kids have come up in world where they don't trust their leaders, where there's not a lot of honest role models. Because of this, they tend to be distrustful and ask people outside the industry for information -- not us agents. They are constantly challenging us. It's easier with other generations."

Xers are the first to acknowledge an underlying lack of trust. "I didn't expect anybody to be in my corner," said Jenkin. "I knew I'd have to do all the homework myself; I trusted my agent but I wasn't sure enough so I double-checked everything."

E-mailer Mangold added: "I was very skeptical of my agent when I first started looking. He's in business to make a buck and he gets a bigger commission if I buy a bigger house. In the end, any time there was a conflict, he was on my side. It surprised me."   

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