Everywhere I turn, I hear the word Millenial. And rightfully so, as they are currently the most coveted demographic in advertising.
I remember the days when my fellow Generation X’ers were the golden children and the apple of every brand & researcher’s eye. Time moves on, but this generation is uniquely different and as I work with many clients (and have many friends) in this generation, I’m constantly tied to them (in a good way!).
By and large, however, the Millenial generation hasn’t been jumping into homeownership the way Gen X did. And with that, many are speculating as to why. There was a very interesting story from CNBC recently about a “Major Debt Shift”, referenced from a just-released study from Transunion, with those aged 20-29 today, versus 2015. Read the story here: http://www.cnbc.com/id/102070346.
The most interesting piece of the article is quoted here: “A decade ago, student loans accounted for only 12.9 percent of the total debt load carried by people ages 20 to 29. As of 2014, it’s now 36.8 percent. In 2005, mortgage debt among that age group made up 63.2 percent of their total debt load. That’s now dropped to 42.9 percent.”
So, 20% less of my younger friends & clients have taken on mortgages. Crain’s Chicago Business addresses this topic in its most recent issue, telling the stories of several Millenials in the Chicago work force. Cheap interest on student loans combined with rising tuition costs pushed the student debt higher. Combine that with the recent housing recession, and it’s an easy question to ask – where are the millenials and why aren’t they buying homes?
Many don’t have the resources to do that, given their high student loan debt – and they have seen their parents and/or older siblings burned in the recession. Add to that the difficult job market and lack of financial stability, and you can see why the number of mortgages within the 20-29 age group is lower than it was 10 years ago.
Today, though, I’m seeing younger buyers who *do* purchase doing so in a more intelligent way.
Here is what I see in the market right now: Clients in the 20-29 age bracket are looking at buying within their means, and in many cases, buying a larger home (2 or 3 bedrooms) in order to rent out to friends or family and help get their mortgage paid for. It’s a very smart move from a very smart generation. Additionally, many are looking at their rent, and in some cases, realizing they could own a similar unit to their rental, for considerably less money per month ($500-600 range in many cases!). From a cost-saving perspective, that makes sense for many. While the number of millenials purchasing a home is lower than it was 10 years ago, when they do purchase, they look to be making smart decisions.