Speculation about the millennial generation’s aversion to home ownership is being replaced by a much clearer picture. Millennials are those born between the early 1980s and the early 2000s and they number almost 90 million. Relatively few own a home, yet. Many regard home ownership as a worthy goal, but perhaps short of being the “American Dream.”
Millennials grew up buffeted by harsh financial circumstances that included a deep recession and a challenging job market. They also had a penchant for taking on massive student debt. The resulting financial constraints color their attitudes toward making any long term financial commitment, at least until their circumstances improve. That translates into a home-buying delay that earlier generations did not experience.
Millennials’ preference for city dwelling is consistent with their taste for nearby friends, food, entertainment and employment. However, as they transition to becoming parents, they will often prefer a home base with more greenspace for children to play in, better public schools, and young family neighbors like themselves. That pending move becomes the trigger for purchasing a home.
US Home ownership dropped to 62.9% in the second quarter of 2016, a low in participation not seen since the fourth quarter of 1964. Despite that somber situation, 74% of Americans still think it’s the right time to buy a home. Millennials agree and 58% are considering a home purchase in the next two years, a full 20 percentage points higher than within the general population.
Millennials would be even more eager to buy if not for some deterrents. Twenty-three percent cite the difficulty of accumulating enough down payment, even though they are better at saving money than the prior generation. No doubt some suffered depletion of their nest egg during the deep recession, and some remain stuck in entry level jobs. Without sufficient income and down payment, they may not be able to afford the higher priced homes typical of districts with good schools.
When they do buy a home, the parameters they consider important are different that those of their parents. They care little about a large lot, but they want to personalize the exterior. They want squeaky clean surfaces but don’t value ornate moldings. They might splurge on granite counters and fancy faucets. Generally, they want to transplant their electronic communications, music and art into a suburban setting.
It appears that millennials will follow in the footsteps of home-buying earlier generations, albeit with a delay of a few years. They will likely enjoy economic advantages that earlier generations experienced – tax advantages, capital gains, good schools, and quiet, safe neighborhoods.
The neighbors of millennials will also see advantages imported by the new neighbors. They will hear new social perspectives and watch millennials walk the talk on healthy lifestyles. Likewise, millennials will learn some traditional values from their trusted older neighbors. This peaceful exchange of ideas and outlooks may help quench the strident bickering that has become our political discourse.