A Low Percentage of Millennials are Buying Homes – Why?
Millennial – the generation born between the 1980s and late 1990s, often associated with technological savvy, social media obsession, short attention spans, and self-centeredness.
But are they? A Pew Research survey found that millennials are more likely to be critical of themselves than older generations, readily identifying with words like “greedy,” “self-absorbed,” and “wasteful.” But the deeper you dig into the data, the clearer it is that millennials are cautious, content, and community-minded.
Cautious: Rent, Not Buy
Millennials are significantly more likely to rent or live with their parents (or in a group living arrangement) than to buy a place of their own. Compared to earlier generations, the housing market is tighter. This scarcity drives home prices up and could keep millennials in the margins of the real estate game because buying a home is too competitive and they may not have the credit scores or ready cash to put in a viable bid. Instead, they opt for a cautious living arrangement, paying rent or pulling their weight in their parents’ homes.
Content: Settled In
Pew also found that millennials aren’t moving as much, from year to year, as previous generations. When they do move, it’s often for a better job, and only 20% of millennial moves result in home ownership. Because our family units are less traditional than our grandparents’ (single parents, cohabitating couples, multiple roommates, and so on), buying a home may not feel as necessary as it did a few decades ago when most buyers were married with children.
Another cause to discourage millennials from buying a home is a combination of incredible student debt and stricter mortgage regulations. Millennials just can’t see the sense in piling house debt onto their school debt when they can rent with lower risk.
Community-Minded: City Living
With high debt ratios and higher risk-aversion, it makes sense that millennials would then choose to live in more metropolitan areas, closer to jobs, grocery stores, public transportation, nightlife, and community resources.
The Millennial Homebuyer: A Portrait
So the 22% of millennials that buy homes – what makes them different?
Millenials skew a little older (the late 20s to early and mid-30s), so they have underlying ties to their parents’ values in homeownership, investment in property, and self-sufficiency.
Millennials were raised on the internet and cable TV, so they have a strong belief in DIY and YouTube videos and experimenting until they get it right. These characteristics make them more willing to buy a home that needs a little rehab than to continue renting. Community-minded aspect plays in here – we trust our friends. If there’s something broken that I can’t fix, I probably know someone who has those skills and will help or teach me.
Millennials have more stable jobs. By our 30s, most of us have figured out what we want to do and found a company or city that will support that career path. Suddenly feeling like we may stay with a company for three years instead of one is often enough encouragement for a millennial to commit to something as significant as buying a house.
What do you think? Let us know in the comments!