The media has a lot to say about the generation that’s become known as “millennials,” also known as “Generation Y.” The first generation to grow up with the internet has witnessed a very different way of relating to the world than their parents, and it to top it off, may have come of age in the “Great Recession,” the enormous economic slump that has occupied a good chunk of the beginning of this millennium. One surprising result of these factors is that millennials aren’t buying houses, and that has, and will continue to have, a huge effect on the housing market and the economy.
This decline actually began before the “Great Recession.” In 1980, 61% of homeowners were in their early thirties, which fell to 55% by 2000. For twenty-somethings, the proportion went from 43% to 38%. The rates of young people owning homes has continued to fall. According to the Federal Reserve, the proportion of young people who got their first mortgage between 2009 and 2011 had fallen by half since only a decade before.
The housing market itself doesn’t offer any answers. For the last 30 years, interest rates have been falling, which is excellent for home buyers. It’s easier to get a loan for a mortgage than it was in the past. By all accounts, the market should be flooded with young buyers, but it isn’t.
There are a huge number of reasons for this fact. One of the problems is the mounting behemoth of student debt that today’s graduates are facing. According to Bob Willis in Bloomberg Businessweek, America currently has about $1 trillion in outstanding student debt. And while that means there are more students, it also reflects the skyrocketing cost of higher education.
One of the greatest contributors to the decline of young homeowners, though, is actually another social evolution of the generation. Controlling for gender, education, and income, someone who is married is 23% more likely to own a home than someone who isn’t. Between 1980 and 2000, marriage rates for those between 25 and 44 fell by 15 percentage points: the millennial generation is getting married later, or not at all. One theory about this change is that as women become more equal in the workforce, the incidence of marriages for the purpose of financial security falls.
The other problem is that real estate is an investment, and the generation coming of age in the “Great Recession” has a huge amount of uncertainty about the economy. People are living with their parents or renting apartments with each other instead of banking on a stable economy and investing in buying a house of their own.
Housing isn’t the only sector being affected by this shift in generational thinking. Automakers are also seeing a similar phenomenon: young people aren’t buying cars. Just 27% of new car purchases in 2010 were by adults ages 21 to 34, down from 38% in 1985. Even the proportion of teenagers with a driver’s license fell by 28% between 1998 and 2008.
The Atlantic calls what millennials are doing instead the “sharing economy.” In an era with ubiquitous mobile technology, millennials simply don’t need to own everything. Companies like Zipcar offer car-sharing services made easy with a mobile app. With the huge increase in gas prices, car-sharing is seen as an economical replacement for the expense of owning, and fueling, a car. This “sharing economy” covers other industries, too: websites like Airbnb let people rent out rooms or other accommodations for travelers on a short-term basis.
Like Airbnb, Boardroom Executive Suites offers clients shared amenities, such as a local, dedicated telephone number to serve as your company line; live receptionist answering your incoming calls during business hours; seamless call forwarding to any phone number(s) of your choice; 24-hour voicemail for your after-hours calls or for when you are unavailable; advanced unified messaging with email notification of new voicemails; Available toll free and non-local area code phone numbers; cloud computing; by-the-hour conference-room rentals; kitchen services; and much more.
In this scaled-down economy, the sharing economy makes practical and economic sense.
Why Aren"t Millenials Buying?
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