Millennials and Real Estate
I'm sure you clicked on this because you desired to read an article lambasting the most entitled, listless, and whiny generation to ever issue forth upon the earth. Or, maybe you wanted to read a cheeky, sardonic refutation of the popular criticisms of the Millennial generation. Indeed, you may even expect a member of this particular demographic such as myself to posit that "we really aren't that whiny, and even if we were...we deserve to complain!"
Sorry to disappoint. Although it makes for facile public commentary, I don't have much confidence in demographic analysis as an explanation for human behavior when it comes to the purchase of real estate.
There are many reports in the media about how Millennials are reluctant to purchase real estate. However, I suspect a more useful observation would be that there is a general reluctance to purchase real estate among low income persons. As you might expect, this observation makes some very uninteresting news. I don't think Millennials are hesitant when it comes to buying homes because they refuse to embrace adulthood, or because living with Mom and Dad when one is 27 is "such a sweet deal," but rather because many Millennials happen to have low income and expect to relocate often.
Recently, I was at a networking event speaking with an acquaintance who had relocated to Pittsburgh one year ago from the east coast to be near her fiancé. He moved from Nevada to Pittsburgh to attend graduate school, and just found out that the postdoc opportunity available to him happens to be in South Korea. Think they'll get married and buy a "fixer-upper" in Pittsburgh? Neither do I!
I've spoken with dozens of others of my generation dealing with similar situations. Not only do many Millennials happen to have low income, we also live with the realization that frequent career and location changes make it impractical or financially foolish to "buy in" to any community. For many of us, even if we could get an excellent mortgage rate right now (despite our meager incomes), the emotional toil of buying a home while suspecting that one will be asked to leave it soon can seem fruitless.
Many Millennials have been instructed to chase their dreams, and many are following that advice. Setting aside the question about the quality of that advice; buying a piece of property in any place where we happen to be staying as we "chase the dream" seems ridiculous! The dream could move any day, to any where, and we have to be ready to drop everything and follow it! From this perspective, owning a house can seem like an obstacle to fulfillment.
In sum, I largely agree with the myriad commentators who suggest that refusing to grow up is a poor choice. I also think home ownership is a great financial opportunity, and contributes to the general well-being of our communities. However, I also realize that low income transients shouldn't be expected to form lines at the next available house for sale. I'm not suggesting that "Millennial" is synonymous with "low income transient," but rather that a greater number of Millennials may be adequately described as such than many people may expect.
If I had to make a prediction for the real estate market going forward, I would say that home ownership will decline somewhat while the market for higher-end rentals will continue to expand. Though I deal mostly with sales, I get calls and e-mails for higher-end rentals on a daily basis. And, this is Pittsburgh, a place with a stable and largely un-inflated market. I imagine the situation in L.A., San Francisco, Boston, or N.Y. (popular destinations for "the dream") is much more extreme.
What do you think? Are you a Millennial who owns a home? What made you decide to stick around for a while?