American Demographics magazine is out with a new look at who is buying homes in America, finding that more and more single Generation X’ers, armed with tons of cash from high paying jobs, are bypassing the age-old "rent-until-you-settle-down" scenario and going straight for "land baron."

The article in the September issue, written by Kendra L. Darko, notes that "the number of unattached 18-to24 year olds making over $50,000 a year grew by 75 percent from 1994 to 1997, while the number of single 25 to 44 year-olds making the same amount grew by 59 percent."

Even more incredible, she notes, "Six-figure earners in both categories also showed respectable growth: 38,000 singles aged 18 to 24 made over $100,000 in 1997, an increase of 65 percent over 1994, while 241,000 25-to-44 year olds did the same, a 35 percent increase."

The phenomena is partially the result of a booming economy being fueled, in part, by the Gen-X’ers favorite playground -- the Internet. But across the board top American companies are paying top dollar to bring aboard the brightest college students.

The even better question is what the impact is going to be on the real estate industry.

Numbers from the National Association of Realtors suggest the average sales associate is in his or her late 40s and the average broker in his or her early 50s. Only 6 percent of Realtor members are under age 29. But they may be a wealthy 6 percent.

The problem, says Steve Jacobson of Brian Logan Real Estate in Washington, is that, "X’ers buy from X’ers. They trust people closer to their own age."

The problem with that "Generation Gap" is that it may be leading to a "Generation Lap."

"The top producers in our office right now are a couple of guys. One is 31 and the other is 38," says Jacobson. "They’re working almost exclusively with first time home buyers -- but that doesn’t mean low-priced housing anymore. These people are buying in all price ranges. A lot of them are above $150,000."

Jacobson, in his in 50s, says he has been able to work with generation X’ers and finds them different from older home buyers.

"I work with a lot of young women, but these women are making $75,000 to $125,000 per year," he says. "And the thing is, they all under buy. They all are buying less house than what they can afford."

Historically, he says, homebuyers buy up -- purchasing as much as they can convince a bank they can afford. The younger buyer, however, has an alternative agenda.

"They want in the market with the minimum possible to get the tax write off," he says.

The National Multi-Housing Council is sufficiently concerned about the trend of traditional renters moving straight into ownership that it has alerted its members to re-examine any new apartment construction project.

Says American Demographics, the problem is that with young people having so much money and rental markets even tighter than ownership markets, it often is cheaper for young people to buy than to pay rent.

Published: September 13, 1999

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