Leave it to Beaver, The Brady Bunch or Little House on the Prairie, depicted the essence of the American Dream. It was a dream to own your own home, your own slice of Heaven, if you will.
Through the suburban expansion of the post war housing boom to the ticking time bomb known as subprime lending, buying your own home was the right of passage to adulthood. Rent for as long as you can stand it; save your 20% down payment; and buy that first little starter house. As your family size grows, and hopefully your paycheck, the homes will likely grow in size as well. Urban sprawl and the nearby mega mall were the way of life.
However, for the new up and coming young Millennial professionals and the under saved aging Baby Boomers, a new mindset about housing and its role is emerging.
Consider this: Even with near record low interest rates, home ownership in this country is at a 52-year low. Yes, less people own their own home today than at any time in recent American history, predating the Vietnam War.
Length of home ownership is also at an all-time low. The average individual who buys a home today, will live in it for only 7.2 years. Today’s society is much more mobile with employment being the key driving factor. Relocating for work or pursuing a higher paying opportunity have become the norm.
Whereas Baby Boomers viewed housing as a long-term investment and a place to lay down generational roots, today’s Millennials view housing as purely utilitarian. Consider the following facts:
- The average Millennial will work for 7.7 companies in their professional life, meaning every 4 to 5 years they will change jobs or their job will change them. Mobility is essential.
- Many of today’s young professionals are often laden in student loan debt, with many finding themselves under employed to their level of education.
That mounting student loan debt paired with lack of jobs in their area of expertise seems to be making that dream of buying a little start-up home and the ability to bridge the income to price gap little more than just that, a dream.
Additionally, unlike their parents, Millennials are leaving suburbia in favor of in-town living to locations being re-gentrified as we have seen in areas like Brooklyn, NY. Long gone too, is the stigma of renting. It’s no longer, do you rent, but, where do you rent. Remember folks, this is the Uber generation. Many of them don’t even own cars or can’t justify the costs associated with ownership, and often prefer a communal living environment.
The impact of the Millennial mindset as well as Baby Boomer suffering from under-funded retirement accounts is causing a shift in the housing market. We’ll discuss moves smart real estate investor are taking, and if those moves will sustain them for the long term in next month’s article.
To learn how to invest in real estate, visit www.otarealestate.com.