Which generation is struggling most when it comes to home buying?

According to findings in an upcoming report from COGNITION SmartData, the generation having the most difficulty purchasing homes in America is not everyone’s favorite punching bags – millennials – but their predecessors, Generation X.

Gen X can be blamed for plenty, like keeping Pearl Jam on the radio in 2020, but according to Sara Gutterman, CEO of Green Builder Media, their inability to purchase homes is more the fault of the 2007 financial crisis.

“In the 2008 recession, it was really the Gen Xers that got hit the hardest,” Gutterman says.

Entering what should have been for many their prime homebuying years over a decade ago, Gen X was lured into the housing market at exactly the wrong time. When it tanked, and millions of recently purchased homes plummeted in value, Gen X’s credit took a vicious beatdown.

“It really wrecked their credit and had a big impact financially,” says Gutterman. “They just haven’t been able to recover.”

Gen X has been denied mortgages more often than any other generation due to their high-debt-to-income ratios and low credit scores. COGNITION’s report says Gen Xers are also the least likely cohort to buy in today’s market. Prior to the COVID-19 pandemic, 42 percent of Gen Xers were planning to buy a house in the next five years. But since COVID-19, 30 percent have reported that they plan to stay in their homes for longer than planned.

Because of their previous struggles, Gutterman feels Gen Xers were especially susceptible to the economic effects of the COVID-19 crisis. With their credit already damaged and their incomes drying up because of COVID-19-related lockdowns, many Gen Xers are not only in a bad place, they realize it, too.

“I think, psychologically and financially, they’re not feeling healthy or stable,” she says.

Another challenge for Gen Xers is the high cost of raising children. As Gutterman explains, many Gen Xers have kids who now occupy a very expensive age bracket.

“These are the parents of kids that are going to college right now. They have a lot of expenditures related to their kids,” including additional debt that is frequently taken on to further their children’s education, she says. “College tuition is off the charts for the most part.”

While millennials and Generation Z are now passing through their own recession, the length of which is anyone’s guess, Gutterman feels they won’t be carrying around the same two-ton fiscal baggage Gen X has been saddled with. Considering the continued strength of the U.S. housing market, youngsters who purchased prior to COVID-19 are unlikely to find themselves underwater any time soon.

“I don’t think they are going to fall as far backward in general,” she says.

Gutterman says that for Gen Xers to get back in the game, mortgage professionals will have to put on their financial advisor hats and urge their Gen X clients to live a more disciplined lifestyle.

“It’s really about diligence. It’s about paying down your debts, making sure you’re spending within your means and not growing your debt,” she says, adding that potential borrowers should be encouraged to keep their credit spending to 30 percent or less of their total credit limit.

Originators must also work with clients to ensure they have as full a picture of their credit situation as possible to eliminate any extra credit checks.

“That’s going to further impact their credit score,” says Gutterman.

That’s something few Gen Xers can afford.