What is the deal with the Millennials?
By Jeremy Conaway, NWREporter
Brokerages are currently being challenged in their efforts to capture a commanding share of what some in the industry are trying hard to classify as a "Millennial land rush." The fact of the matter may be that the current situation may not constitute a land rush at all but rather a generation playing out its unique developmental destiny.
The industry's conference and literature environments are currently awash with presentations and articles about the consumer behaviors of the 80 million Americans between the age of 18 and 34 that comprise what is generally known as the Millennial generation. While much of the information that is being shared is simply a rehash of extremely limited professional and previous offerings, there is one new publication that meets everyone's five star test of relevancy, accuracy and power.
Last week the Pew Research Center, a unit of the Pew Charitable Trusts, issued what is probably, at this point in time, the definitive report regarding the Millennial Generation and their current interactions with the housing industry.
The Pew Charitable Trust is an independent non-profit, non-governmental organization (NGO), founded in 1948. With over US $5 billion in assets, its stated mission is to "serve the public interest by improving public policy, informing the public, and stimulating civic life." It is, by any criterion, an amazing fountain of knowledge that matters.
The Pew report is entitled More Millennials Living With Family Despite Improved Job Market. The report contains a revealing analysis of U.S. Census Bureau data regarding this increasingly important demographic. For real estate professionals seeking to effectively work with this group the following insights will be essential.
- The post great recession economic recovery has now been in existence for over 5 years.
- Despite this history fewer individuals within the 18 - 34 years old group are currently living independently in their own households than in the height of the recession in 2007.
- The employment economics of the Millennials are also recovering nicely. In 2015 Millennials with a college education will make an average of $51,000 while those with a high school diploma and "some" higher education will make about $30,000. These statistics suggest that income is very close to having recovered to pre recession rates. Some experts suggest that what the Millennials lack is not adequate income but rather the ability to live on the same level as their boomer parents.
- 51% of Millennials with a college education are running their own households as opposed to 43% of those without a degree. These statistics are somewhat below pre recession rates.
- The data also suggests that while the repayment of education related debt is a factor in deciding whether or not Millennials live independently it is not as critical a factor as previously thought.
- The latest census data indicates that there has been no significant increase in the percentage of Millennials living with their families since 2007.
- Neither is being "doubled up" (either living with parents or having a roommate) significantly increased since the recession.
- Of special interest to housing and real estate professionals is the fact that in 2015 only 25 million Millennials head up their own households compared with 25.2 million in 2007 despite the fact that there are some 3 million more individuals in this demographic group. This has had a very negative impact upon the housing market. There is no evidence that household formation rates in 2015 have significantly increased over 2010.
- Another demographic factor impacted by the recession was college enrollment. During the 2010 - 2012 period there was a dramatic increase in enrollment but those numbers have retreated over the past three years. Despite media stories that suggest that higher education doesn't "pay off," the evidence provided by the Pew report differ dramatically and suggest that education, even with student loan debts, remains one of the best investments a young individual can make.
The relevance of the information presented in the Pew report is something that every real estate professional should study and apply to their unique business. They should beware of the stereotypes and generalities that are currently being peddled as contemporary marketing savvy. Many are nothing more than short-term observations that their authors are attempting to convert into long-term marketing wisdom.
What the Pew report was not charged with, and did not comment on, are the vast number of philosophical, lifestyle and cultural factors that are now formatting the lives of the 18 to 34 year old set. The factors that are contributing to the hesitancy of the Millennials to engage in certain housing decisions (e.g. purchase) are complex and significant. They go well beyond how agents are interacting, what they are saying and how they are presenting the issues connected to owning one's own home. They are not all about economics.
Perhaps the most significant of these factors is that many were raised by the most complex of all generations; the "boomers." Only history will disclose the full impact and force of having boomer parents. Boomers themselves demonstrated the impact of having "civic" generation parents. Most couldn't escape that oppressive environment fast enough. The Millennials are demonstrating just the opposite behavior. The basis of this attraction and relationship may well be the foundation of the real estate industry's challenge with this demographic.
It is becoming increasingly obvious (Supported by the Pew Report) that the impact of the recession on the Millennial generation may be far less than previously assumed. A strong case can be made to support the idea that what is happening relative to this generation and its housing decisions may well be a product of the culture in which they were raised. Consider the fact that nearly 50% of Millennials who have purchased a residence received significant funding support from their families. What expectations will these actions by Boomer parents carry into the future? Given the economic realities of upcoming retirements, is it possible that Boomer parents will demand repayment of these grants at the very moment that the Millennials are feeling the heaviest burdens of raising families?
It is way too early and there has been far too little history connected to the Millennials for real estate professionals to believe that a dependable set of Millennial centric rules and procedures have emerged. Caution is the key here. Do some homework and closely track emerging research such as that recently contributed by the Pew organization.