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The Kids are All Right
The kids are all right
With boomers on sidelines, generation once called slackers now targeted by brokersDecember 29, 2008 05:17PMBy Candace Taylor
Move over, boomers. In the current down economy, Gen X buyers are the ones brokers want.
In a surprising twist of fate, baby boomers paralyzed by crippling stock market losses are being pushed aside in favor of these buyers, who despite their thin credit histories and predilection for borrowing from their parents, are more active in the market.
In recent years, baby boomers who were on the verge of retirement commanded much of the city's real estate buying power, from high-level executives splurging on trophy homes to suburban empty nesters snapping up city pied-à-terres.
But while their boomer parents are now reluctant to buy or sell homes, younger buyers are often forced to move despite the sinking economy because of life changes like marriage and growing families, making them a key demographic in a recession.
Boomers are "in shock," said Elaine Clayman, a senior vice president and top-selling broker at Brown Harris Stevens. "We now have financial insecurity. It's a really big change."
Because boomers have "now lost a substantial amount of their savings," Clayman said, "they're no longer looking to buy property."
Or, as Michael Signet, the director of sales at Bond New York, put it, "I wake up every morning and have to take Pepto-Bismol every time I read about the stock market."
Of the few remaining buyers, many are under 40, because younger people are more likely to experience life-changing events that force them to move, said Jacqueline Urgo, president of the marketing and sales firm the Marketing Directors. "With younger buyers, it's not a discretionary purchase," she said. "You can't have a baby in a studio."
Another reason young clients are sought after in the slowing real estate market is because they're often first-time home buyers. Thanks to the credit crunch, lending restrictions have tightened across the board, and buyers in all sectors of the market are having trouble getting mortgages. But now that sales have drastically slowed since the calamitous Wall Street meltdown this fall, first-time buyers now face one less obstacle than homeowners: They don't have wait for their current home to be sold before committing to a new purchase.
"A first-time buyer doesn't have the problem of needing to sell their house to get the equity," said Jeff Li, a vice president of Staten Island-based Leewood Real Estate Group, which is marketing homes in its Estates at Opal Ridge development primarily to young families.
Another advantage, he said, is the new federal tax credit of $7,500 available to first-time homebuyers through the federal Housing and Economic Recovery Act of 2008. That, combined with low interest rates and falling prices, makes it a good time to buy as long as buyers have good credit and money for a sizeable down payment, he said. For many, that requires help from parents. "They'll probably borrow from their families to get their down payment," he said.
And many parents seem happy to oblige, despite their reluctance to buy new homes for themselves.
"There are a lot of parents helping," said David Kazemi, a vice president at Bond New York, who is representing a young, single man who has rented an apartment in Greenpoint, Brooklyn, for years, but is now looking to buy a one or two-bedroom apartment in the area with help from his parents, who have cash on hand from the sale of a piece of international property.
Kazemi said parents are sometimes willing to help because they're looking for alternative investments.
"People have lost faith in the stock market," Kazemi said. "Real estate's a little more stable."
But targeting new, younger buyers requires methods that many brokers are unaccustomed to using.
Clayman, for example, realized recently that tapping her usual pool of clients wasn't generating many new deals.
"I'm not doing my normal schmoozing," said Clayman, whose current clients include a newly married young couple who must sell the bride's former home, a studio in the East 40's. "There's an instant rapport with people my own age, but am I going to do any business?" she said.
"To do business over the next five years, I have to focus on Generation X and Generation Y," Clayman said. "They are the ones that have to move. And I have to communicate with them the way they're used to communicating."
To target them, Clayman added a Gen X category to her list of contacts, started sending out e-mail blasts in addition to print mailings, and joined Facebook and LinkedIn. "I've been able to get back in touch with some of my old clients who are now having babies," she said. "It gives you a reason to keep in touch."
Clayman initially took a fair amount of good-natured teasing from friends of her 33-year-old daughter Justine after she joined Facebook. Originally available only to college students, the social networking site has surged in popularity with 20- and 30-somethings, with more than 70 percent of users age 34 or younger.
"My daughter's friends say, 'Your mother is the only grown-up on Facebook,'" laughed Clayman.
But for Clayman, the Web site is much more than a social outlet. It's a crucially important way of connecting with younger clients in a marketplace where a majority of the few remaining buyers are in their 20s and 30s.
Bond New York also has a Facebook page, Signet said, and advertises in Billboard Magazine and Variety in hopes of targeting younger audiences.
Another way to reach first-time buyers is by targeting renters, said Urgo of the Marketing Directors. Her company is using the tactic to sell units at the Setai at 40 Broad Street in the Financial District, the Atelier at 627 West 42nd Street and the Visionaire in Battery Park City.
"We're doing more rental mailings than we have in the past," she said. "We're reaching out to higher-end residential buildings and inviting them to move up to home ownership. That young audience — that's who's renting."
And of course, word of mouth is crucial, Urgo said. "The young audience talks up a purchase and refers their friends," she said. "When it's your first purchase, it's part of the cocktail party conversation."
As for older buyers, they'll venture back into the market eventually, Urgo said. "It will come back around."