The Growing Echo

Most high school seniors take the money they get in graduation cards and use it to help pay for college, outfit their dorm room, or take a great summer trip. Ashley and Ashton Carthans had a different idea. They bought a house.

As college freshmen at Joliet Junior College in Joliet, Ill., the twins shared a “really cheap” apartment—and hated it.

“We weren't happy with that at all,” Ashton says. “It was throwing our money away.”

A year later, they were both working as managers at their jobs—Ashton working as a branch manager for a bank and Ashley managing a cell phone store—and making decent money, so they went looking. Even knowing there would only be two of them in the house, the Carthans say they wanted a minimum of three bedrooms for the resale value. They wanted a big kitchen with an island because they both like to cook. And they liked the idea of buying in a developing area because they would get more house for their money, and it would appreciate later on.

Like many first-time buyers, they initially looked at existing homes, but didn't want to spend all their spare time and money fixing a house up.

“With both of us working 40 to 45 hours a week and being full-time students, we didn't have time to fix up a house,” Ashton says. “We wanted a brand-spanking-new house.”

They qualified for an FHA loan and combined their high school graduation money with withdrawals from their respective 401(k) accounts—established when they started working in high school at companies that automatically enrolled their employees—to cover closing costs. In November 2005, they moved into a 1,906-square-foot, three-bedroom, three-and-a-half bath house from Lennar in the Summerfield neighborhood in Minooka, Ill. They got their big kitchen with an island and stainless steel appliances.

“My kitchen, oh my goodness, it's just so beautiful,” Ashton says. “My cabinets are amazing.”

She also loves the loft area—that's where she and her sister do all their homework—and she thinks it's “really neat” to have a washer and dryer upstairs. They turned one of the guest bedrooms into a workout room. It's much more house than she ever thought she'd have at such a young age, and she's thrilled with it.

“We were just looking for a plain house so we wouldn't be throwing our money away on rent,” Ashton says. “When we found all the things we wanted in a dream house at an affordable price, it was very exciting to us.”

Just 19 when they bought their house, the Carthans twins are far from the typical first-time home buyers, but they certainly aren't alone as part of a generation known as echo boomers. (They're sometimes also called millennials or Generation Y.) As the children of baby boomers, they represent almost as large a group as the 78 million of their famed parents. They share many of the same attitudes about housing as slightly older Gen Xers, who generally are classified as those born between 1963 and 1978. But Gen Y members are even more comfortable with technology and more connected to their social groups, as seen in the massive popularity of such Web sites as MySpace.com and Facebook.com.

While the U.S. Census has no formal description of echo boomers, the National Association of Realtors—and other organizations—defines them as those born between 1982 and 1995, a group that totals about 75 million people. They are turning 21 at a rate of about four million per year, they are not afraid of taking on large amounts of debt, they have parents helping them with down payments, and they will be a major market for housing for years to come.

As a group, they share some characteristics that should be important to builders. First and foremost, they live in a totally connected, yet wireless world. They've never known a time when they didn't have home computers, Internet access, e-mail, or cell phones, and they're completely comfortable with technology. They expect that their homes will be equipped to handle their laptops, wireless routers, plasma TVs, video game controllers, cell phones, digital video recorders, iPods, and cable or satellite TV and radio.

They've rejected the hard-charging, workaholic attitude that was prevalent among adults in the 1980s and 1990s—and the cocooning trend in housing that went with it—for a more balanced lifestyle. They're less materialistic, less willing to work nights and weekends to pay for stuff they don't have time to use, and less willing to endure long commutes to jobs that keep them away from their loved ones. That means they're prime candidates for infill and transit-oriented development, particularly if it's close to amenities they value, such as restaurants, parks, shopping, and night life.

They don't want to spend their spare time taking care of a house and doing yard work, so new housing—including attached housing—is attractive to them.

“It's not because they can't afford single-family detached,” says Linda Mamet, vice president of sales and marketing for John Laing Homes' South Coast division. “It's about convenience, service, being close to entertainment, and balance between work and life. They're not willing to compromise their time.”

They're also not willing to compromise on quality, Mamet says. They've grown up with 500 cable channels and entire networks devoted to housing and fashion. They know and appreciate good design, and while their budgets might not permit high-end finishes throughout the home, they're willing to pay for it in areas that matter to them.

“They don't want it all,” says James Chung, president of Reach Advisors, a consumer demographic firm that studies echo boomers. “It's a shift from possessions to passions. This is a generation that has resigned itself to ‘I can't have it all, so I'll just have what's important to me and let the rest slide.'”

What's important to them is connecting with people. While buyers in the '80s and '90s saw their home as a place to get away from the world, echo boomers consider it a place to draw people in. Their parents, the baby boomers, were the first generation to experience dual-income families and a 50 percent divorce rate, so echos spent a lot of time as kids by themselves—and they don't want that for their families.

Quality time is viewed negatively by this new generation of parents, Chung says. It's about quantity time, and that means homes that facilitate hanging out instead of everyone hiding behind their own closed doors.

“They want the family to be more together,” Chung says. “They want more cohesiveness and togetherness.”

In floor plans, that translates into fewer rooms but more flexible space, including outside living areas, such as cozy side-yard patios and covered loggias. One example of this is found in Tributary at New Manchester, a master planned community in Douglasville, Ga., geared to both echo boomer and Gen X buyers. The staff at Tributary fondly refers to the Oak Park model by Leland Homes as “Gen X Nirvana.” It features an open gathering space and dinette—in place of separate spaces for both a formal living room and dining room—to encourage family members to connect with each other. The home also boasts an owner's retreat that opens onto a covered porch on the first floor for more quiet gathering, and a bedroom with a computer-oriented loft upstairs that offers a third location for hanging out. They're all features that appeal to echo boomers' fondness for bringing friends and family together.

Having multiple areas for gathering doesn't mean Gen Y buyers want lots of square footage, though. Bigger isn't necessarily better in their book, both because of affordability and the maintenance that goes along with a larger home. They generally want three bedrooms because they recognize that it's important for resale value, but the rooms must function well with features such as ample closet space and wiring for phone and computer lines. Like the Carthans twins, they might use one room as a home gym, or as an office or a library.

“Even if they're not going to use all the bedrooms initially, they use those spaces,” says Janet Kennemer, vice president of marketing for Centex Homes' Southern California Coastal Division. “It allows them flexibility and value for resale. They're always looking a step ahead. We didn't offer that on one product and that hurt us.”

While echo boomers are happy with a smaller square footage, they want it to be well thought-out and well-organized, with no wasted space. If there's an opportunity for a small workspace on a landing, they love that, and shelving and storage systems are big in master closets.

Mamet is seeing it, too. Options such as dedicated workspace, pullout pantries, and lazy susans in cabinets help her customers compromise on the size of the house.

GATHERING SPOTS: The Oak Park model by Leland Homes in Atlanta's Tributary development pays careful attention to the echo boomer's passion for bringing together family and friends and their love of clean design. It offers several gathering spaces that flow easily into each other.

“They're prepared to scale down, but they want high quality,” she says. “It must have smart design. It fits into the idea of having a place for everything.”

In terms of amenities, the strong desire to spend time with their families and friends plays out in a couple of ways. At the activity center at Tributary, Douglasville Development included a covered fire pit, along with two swimming pools and a fitness center. The center has become a popular spot for neighbors to gather. Parks are planned for every 50 to 75 homes in the 1,600-acre master planned community; general manager Richard Mildner says the most popular is the dog park.

It's no wonder. Delaying marriage and parenthood, Gen Xers and echo boomers share a lot of the same attitudes and demographic characteristics. For example, both groups are four times more likely to own a dog than their parents were at the same age, Mildner says.

On the north side of Atlanta, the Sivica Homes community of Park Village not only gives its residents a clubhouse with a pool and extensive walking trails, but also cuts the grass. Sales consultant Brad Shaull says he thought he'd never be able to sell buyers on a $200-a-month fee for HOA dues and services, especially with a price point from $175,000 to $250,000. (The fee for HOA dues and bundled high-speed Internet, cable, and phone services at Tributary runs about $170, and its homes start at $230,000 and go up to more than $800,000.) But when Shaull explains that it includes upkeep of the clubhouse, lawn maintenance, and bundled high-speed Internet, cable, and phone service, they don't even blink.

It fits perfectly with echo boomers' sense of working to live instead of living to work, Chung says. They don't want to spend their spare time doing home maintenance. They'd rather be cooking out with their friends or playing with their dogs. Walking trails that link neighborhoods to elementary schools or parks and design that preserves open space and protects the environment also connect with the values that both Gen Xand Gen Ybuyers hold dear. All the homes in Tributary participate in the EarthCraft House program, which uses independent, third-party inspectors to measure energy efficiency, indoor air quality, water conservation, low maintenance, and use of natural resources.

“Those things have massive appeal,” Chung says. For builders looking to reach the next generation of home buyers, it's crucial to pay attention to what they value—and what they're willing to pay for.

“It used to be that a lot of large marketers ignored [the echo boomer] generation because the baby boomers were so large,” Chung says. “For the home building world, if you're doing first-time homes or trade-up homes, this is your market. You can't [ignore] it.”

Centex uses the bizarre to build buzz with young buyers.

CONNECTION POINTS: Echo boomers look for ways to connect with family, friends, and neighbors, both those with two legs and those with four. Front porches, sidewalks, and pocket parks offer natural, casual spots to perfect the fine art of hanging out.

A 20-something crowd was planning its weekend get-together during happy hour at a bar in San Diego, when Sasquatch walked in. Not surprisingly, he attracted some attention. So did his ride, a fur-covered Chrysler Sebring convertible, and his date with wings and a wand, AKA the Tooth Fairy.

As this was just one of many stops, several crowds encountered the fanciful couple, and invariably someone would walk up and ask them what they were doing. They responded by sharing a postcard that said, “1) Sasquatch; 2) Tooth Fairy; 3) An affordable place downtown. One actually exists.” The postcard also listed the Web addresses www.sasquatchsandiego.com and www.toothfairysandiego.com, which directed visitors to www.centexdowntown.com/element, a site with detailed information on Element, a Centex condominium project geared to young, first-time buyers.

This is a real estate marketing campaign? Where are the newspaper ads and billboards with the stock photos of happy, smiling, target-demographic people?

The answer: nowhere, because they're totally wasted on this generation that has never lived without the Internet and is fluent in the peculiar language of text messaging.

“None of them read the newspaper,” says Jon Bailey, CEO of Bailey Gardiner, which created the campaign for Element. “They don't pay attention to any mass-media marketing.”

As a result, sales efforts need to take a very different approach. To introduce the target buyers to Element, Sasquatch and the Tooth Fairy became regulars in San Diego's East Village.

“By bringing them to life, we were building a program to put them on the streets and interact with the buyer in their habitat in a completely unusual and bizarre way,” Bailey says.

As part of the campaign, the characters drove the car back and forth in front of a TV station with a live morning show, just to show up in the background and generate the buzz that is so critical to catching the attention of echo boomers.

“The anchor finally got up, went out, and talked to them,” Bailey says. “It was very guerrilla marketing—do it now and apologize later.”

The results: 18 units sold during the six-week campaign, five times the sales pace before the campaign started.

Once at the Web site, prospective buyers saw stylized illustrations of hip people instead of stock images, something that was done to fuel the buyer's imagination. “By using illustrations, we can create a mood without being specific,” Bailey says. “I didn't want to show them a picture and have them say, ‘That's not me.'”

The Web site allowed them to move furniture around in a floor plan and see the view from every room on every floor. An online community let them talk to other buyers and build relationships early on.

Marketing also included introducing prospective buyers to the neighborhood.

“We did a lot of programs like, ‘Let me show you what's cool and hip in the neighborhood,'” he says. “We did walking tours and a lot of PR with pool halls and galleries. We met with business owners to work out cross-promotional PR. We got discounted gift certificates at restaurants so we could tell people, ‘Come check out the area and have dinner on us.'”

Both the online community and the walking tour were created because echo boomers place a high emphasis on referrals. They want other people to confirm that they're making a great choice.

“They need someone to reinforce their decision,” Bailey says. “An ad or a story in the paper won't do it. They want one-on-one.”

Traits of echo boomer consumers and what these traits mean to builders.