In today’s face paced market things are changing at lightning speed rates. With technology, the internet and the need for instant gratification trends are coming and going. Things couldn’t me truer with the Millennial population and if you are in real estate as an investor you need to understand the Millennials and their mindset or you will too will become yesterday’s trending landlord.
The Millennials, also known as Generation Y, were born between 1982 (1980 per some research) – 2000, today this puts them between 16-34 (or 36) in age range. Their spending power in the economy is growing fast. In 2015 Millennial spending was 2.45 trillion dollars, and it’s expected to reach 3.39 trillion by year 2018, which will give them the most spending power of any other generation. This fact in and of itself is reason enough to get to know this generation and their habits on housing, spending and employment.
By year 2025 3 out of 4 workers will be millennial age. They are the most educated generation in American history, 63% of them having bachelor’s degrees. The problem for future employers (and potential landlords) is their average tenure on any one given job is 2 years. To put that in comparison the average tenure for a generation X’er is 5 years and 7 years for the baby boomers. This means millennials are job hopping more and with job hopping changing residences often accompanies that, especially in this technological age of employment and commerce.
In general, the Millennials are afraid of commitment to anything. Take the above referenced job for example, leaving after two years. Relationships are another arena the millennials are taking longer. In 2013 the median age for a male to be married was 29.6, and the female was 26.6; whereas, in 1950 for example it was 22.8 for men and 20.3 for women. To dig further in 2014 only 30% of persons aged 20-34 were married in comparison to 1960 where 77% of 20-34-year-old persons were married. Why are millennials afraid to commit? Simple it’s because they were never taught what it was like to commit to anything and have been shown that it’s ok to not commit to things.
I know what you are thinking at this point, “how can millennials housing habits have anything to do with there not being able to commit to marriage or a job?” Well I’ll show you just how it all ties in. In life, we have three major areas that define us. Our career, our marriage and where we are from. Employers today do not commit to their employees like they used to. Think about it. Back in our parent’s day and their parent’s day most people went to work for one company, stayed there for thirty to forty years and retired. With the rapidly changing economy and information age that is no longer the case. More and more companies are outsourcing overseas, cutting down staff and allowing people to work remotely; consequently, because of the information age different more “transit” type jobs are coming available that are more consulting, private contracting and short termed. This is our work place now and given the millennials have grown up in a work place that shows no loyalty to its employees, they are no longer loyal to their employer, rightfully so in my opinion, but since career is one of the major things that defines someone that lack of commitment is starting to spread into other parts of their lives, such as housing commitments and relationship commitments.
Not all millennials are lumped into this category and certainly there are exceptions to the trends but the facts are that millennials are not staying on their jobs as long, they are buying less homes, they are waiting much longer to get married which all ties in to the rental housing uptick trends. When surveyed a lot of millennials valued location of where they live over cost meaning that they would pay more money in rent to live in a certain area than to go to another area that they could afford to own. If trends like this continue and home ownership continues to decline more and more corporations and investors will find themselves catering to the housing need and shifting their focus and investments into the investment property realm.