When Ken and Geneve Hendricks, both 30, decided to buy a home, their first stop was the Internet.

The Norwalk, Conn., couple surfed real estate agents' Web sites, taking virtual tours of houses for sale. They read on-line articles about the mortgage process and what to expect. Then they hired an agent, who helped them find a town house that they could afford-the price was $250,000-and get it financed through Cendant Mortgage.

People in the Hendricks' age group-whom demographers label generation X- are beginning to buy homes in droves, but not quite the way their parents did. They are shopping on the Internet, using gift money for down payments, and viewing homeownership more as a temporary investment in real estate than a chance to settle down.

Unlike the baby boomers who preceded them, they prefer to conduct home- buying research themselves, then consult a professional after doing the homework.

Generation X-those born between 1965 and 1979-is becoming a major force in the market for first homes, so its habits and preferences are of growing concern to mortgage professionals. The National Association of Realtors says Internet-originated mortgage loans will increase from $265 million in 1997 to more than $25 billion by 2001, largely because of younger people's familiarity with the Web.

For now, it is the 20-somethings and early-30-somethings who are contributing to a bidding frenzy for starter homes. The prosperous economy and tight labor market have helped this group start saving money soon after college, and the considerable wealth of their parents' generation has offered added lift.

Their disposable income has translated into soaring housing prices, particularly in first-home markets in urban areas. The Hendricks learned this the hard way. All the properties they liked on the Internet had been sold by the time they called to inquire, and the homes they were able to bid on were sold for well above the asking prices.

"We had upward of seven people bidding on the same house," said Mrs. Hendricks, a swimming coach, whose husband is a business analyst. "Property is moving so quickly, by the time you can even post a picture (on the Internet), it's too late."

In one instance, the Hendricks bid $236,000 on a home listed for $229,500, but lost out to bidders who offered $245,000.

"I asked the Realtor if the property was worth it, and she said, 'It is now,'" Mrs. Hendricks said.

The couple's six-month search, which ended in February, led to the conclusion that the market is "very frustrating for young people," Mrs. Hendricks said. "We work so hard and we think we are making enough money to buy a decent house, but by the time we start to look in our range ... it's very discouraging."

Generation X, with 20 million members, is much smaller than the groups that came before and after it. There are 83 million living baby boomers (born from 1946 to 1964), and 70 million baby busters (born after 1980, and sometimes known as generation Y or the millennium generation).

The relative scarcity of generation Xers has helped them economically. "Wages are up, and there is a crying need for skilled labor," said Forrest Pafenberg, director of the National Association of Realtors' real estate finance research.

In a recent survey, the association found that 64% of first-time homebuyers, and 22% of repeat buyers, were under 35.

George J. Patterson, a Norwest Mortgage branch manager in Southborough, Mass., said 30% to 40% of the loans he approves are to members of generation X. The typical borrower in this age group is married, has a combined family income of more than $100,000, and works in computers or biotechnology, he said.

Younger borrowers are noteworthy for being "very sophisticated" about the process, Mr. Patterson said. Through on-line research, "they know who the top players are in the marketplace and who has the best rates." They are interested in newly constructed homes, and some who are planning ahead delve into the reputations of school districts in various communities they are considering.

Their financial savvy seems to point them toward homeownership, Mr. Patterson said: "Younger people are realizing, 'If I have to pay $1,200 a month for rent, I'm earning the money, and have all these alternative sources for down payment, why don't I just buy the home and get the tax advantage?'"

Professionals who belong to generation X tend to marry later in life than their parents did, which can mean they learn more about financial planning before they settle down. Whereas previous generations of homebuyers typically tapped savings from a bank account for a down payment, the current crop of young borrowers is "selling stock, exercising options, and tapping into retirement accounts and gifts from family members," Mr. Patterson said.

Leanne Lachman, a managing director of Boston Financial and a trustee of the Urban Land Institute in Washington, said this younger group has been able to buy new homes because of a wealth transfer.

By 2010, about $3 trillion will have moved from a parent or grandparent to a child or grandchild, she said. By 2040, the figure will reach $10 trillion.

"The baby boomers' parents are the wealthiest generation in American history so far," Ms. Lachman said. "They have assets that they have been storing up, and there is a lot more information about tax-free transfer."

Older people who have amassed such wealth are taking advantage of the option of giving their children up to $10,000 a year tax-free. For the young, this means "a lot of people are getting family help with down payments, whereas before they would have remained renters," Ms. Lachman said.

Though their circumstances may sound comfortable, generation Xers earn lower wages than people their age did 20 years ago, said Bruce Tulgan, founder of RainmakerThinking Inc., a research and consulting firm in New Haven that specializes in studying generation X as a work force.

Mr. Tulgan sympathizes with Mrs. Hendricks' complaint about her generation's dwindling rewards.

"Among those who are buying houses, (younger people) are likely to be working a lot and working pretty hard," Mr. Tulgan said.

To compensate, these consumers seem more willing than others to move to a different region to get a better deal on a home. Relatively few of them approach homebuying with idea that they will remain in the same community forever, Mr. Tulgan said. Mobility and liquidity are "very important among young homebuyers," he said.

"The one thing these people don't want to do is limit their options," Mr. Tulgan said. "A lot of people are going to be looking for how much the decision commits them, and if they will be able to turn around and walk away from it."

Ms. Lachman said no single region is benefiting from the surge in young homebuyers.

"You don't just have to be in New York to be an investment banker anymore-there are big operations in Chicago, Charlotte, N.C., Dallas, and Los Angeles," Ms. Lachman said.

Moreover, the type of youthful wealth associated with high-tech companies in Silicon Valley can be found in pockets around the country, including Denver, Raleigh, N.C., and the suburbs of Boston.

Young, affluent single people are helping drive up real estate prices in urban areas.

They are "helping cities blossom," Ms. Lachman said. "They want to have the active nightlife, they like the concept of living in the city, and they have the money to do it."

Mr. Tulgan said credit was increasingly easy to come by for generation X, and many young people have built credit histories that their predecessors had not.

Housing experts say that as the demographics of homebuyers change, so do their preferred methods of financing.

A recent Fannie Mae survey questioned households headed by 25- to 39- year-olds about their attitudes toward homeownership and financing. Whereas 27% of baby boomers said home equity would be part of their retirement planning, only 6% of gen Xers said the same.

The survey also found 52% of generation X respondents and 45% of baby boom respondents were attracted to the option of reverse mortgage, a product usually associated with older people. Reverse mortgages allow people to borrow against the equity in their home.

Mr. Patterson, the Norwest branch manager, said younger people tend to have higher debt service-the percentage of income dedicated to repaying obligations-and less fear of borrowing large amounts with little money down. He also has observed that many generation X members are willing to accept private mortgage insurance, whereas older borrowers "want to do everything they can to get away from" such payments.

Another trend among young homebuyers is their reluctance to actually complete mortgage transactions on the Internet, experts said. Many are shopping, learning, and comparing on-line, but most are still first-time homebuyers who want personal guidance and reassurance when it comes time to part with their money.

Mrs. Hendricks, the Connecticut swimming coach who researched homes on- line, is a case in point.

"I wouldn't have felt comfortable doing the transaction on-line," she said. In the end, she said, she was glad "we had a mortgage counselor to ask questions."

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