The narrative we’re used to hearing is pretty simple. Whether the fault lies with an economy that doesn’t provide young people with opportunities or with a lazy, entitled generation that doesn’t know how to save and can’t live without superfast wi-fi, takeout coffee with cinnamon in it and pop tarts for breakfast is a matter of personal opinion, but the facts are very clear. Generation Y – the generation that’s now between 18 and 33 – aren’t moving out of their parents’ houses to form households of their own.
That’s a problem for them – at 18, the basement room looks pretty sweet, but by 30 you’re not so impressive or impressed – and a problem for parents who were looking forward to an empty nest and find themselves sharing staid family homes with their adult children. But it’s a massive problem for the property market in America and in Britain, too, where the same trend is present. Simply put, your country needs YOU – to buy a house, and millennials aren’t cooperating.
Jonathan Smoke, chief economist at Realtor.com, sums up: ‘the story line has been that millennials are not forming households, they’re living with mom and dad.’ But Mr. Smoke points out that that isn’t where they want to stay, if the numbers are anything to go by. In July this year, more than a third of people between 25 and 34 used a mobile device to look at real estate data. That leads him to the opinion that millennials are planning their next move – even if it’s their first – and reaching for the natural tool of their generation, mobile internet, to research the market and learn their options.
That impression is backed up by data from elsewhere. Millennials might be staying with their parents for now, but it’s not the plan – according to a recent Redfin survey, 92% of 25-34-year-olds who don’t currently have a home want to buy one in the future. And they have pretty clear ideas about what they want, according to Nela Richardson, Redfin’s chief economist.
That’s important because we can expect millennials to one day comprise the majority of the housing market, as their parents stop buying and younger people with less income and different interests can’t buy as much market share. The wants and needs of the ‘baby boom’ generation shaped the American housing market for decades, and millennials, says Ms. Richardson, will do the same. Mr. Smoke agrees, and points out that there are 87 million millennials in the USA – compared with 75 million boomers.
Amenity-rich urban environments are currently the big draws for millennial renters, the segment of the population that has a say about where it lives. All the clichés are in place, like coffee shops and bars, but so are some eminently practical, down-to-earth considerations like walking to work and proximity to transportation. Ms. Richardson thinks that when millennials come to buy homes, they’ll transfer this amenity-rich lifestyle right along, and she foresees a suburbia transfigured by millennial preferences. But there’s another alternative. What if millennials are the generation that repopulates American cities – and what if the same happens in the UK and Europe?