Why aren’t Millennials buying real estate?
You’ve probably seen them before—those trendy youngsters toting messenger bags, riding a bicycle to work and changing the workplace as you know it. Those Millennials (people born after 1980) are unlike any other. Immersed in a highly advanced technological culture, a drastic paradigm shift has occurred when it comes to their idea of attaining the so-called “American Dream.” The younger generation has traded in owning their own cars and the large house in the suburbs with white picket fences, for bicycles and a rental high rise condominium in busy places that seem to mirror the size of our beloved walk-in closets.
But why are Millennials trending this way?
Make no mistake; the Millennial generation is not lacking any necessary skills to thrive in today’s society. In fact, it is the most educated generation in history with more than 34% holding a college degree. They are also the largest generation with 80 million nationally and 2.5 billion globally, and easily the most diverse and technologically advanced (and remember that when you have a question about your smartphone).
The answer to why Millennials are straying from traditional norms lies in several things.
Today, student debt is higher than ever. According to CNN, the average amount of college related debt for the class of 2013 totaled more than $30,000, which at an average 7% interest rate is equal to nearly $400 a month (with nearly $12,000 in accrued interest). One could easily understand that some Millennials are just not in a position to own yet.
But not all Millennials are experiencing the weight of student debt. So why aren’t they buying?
The advancement of technology could play a crucial role here. We have entered a society where we can have answers to any question within a few seconds and finger taps. And the way we relate to one another has drastically changed as well. The Millennial generation prefers texting over a phone call; email over a letter; and Twitter over any major news network. Fewer and fewer Millennials are choosing to marry, which means more and more Millennials are choosing to live alone after college. That can be chalked up to convenience and flexibility. If you need evidence for that, 45% of Millennials polled in a national survey showed that they “would choose workplace flexibility over pay.” Additionally, 89% of Millennials polled in the same survey said they “would prefer to choose when and where they work rather than being placed in a 9-to-5 position.” Buying is seen as a burden; a ball and chain to whatever city you live in, which provides a hindrance from that flexibility that is so desired. Millennials want to travel and have the ability to up and leave at the drop of a hat, something that a homeowner would be far more hesitant to do.
And the impacts of this Millennial flexibility are evident in the Columbus market. The majority of the Millennial generation wants to be in a place where they can work, live and play just steps from their front door, and local investors in and around the Columbus market are infiltrating the market with more and more 1 and 2 bedroom condominiums. The Short North, Downtown, Arena District, German Village, and more are where those Millennials want to be and the supply is low as a result. So, if the Millennials aren’t buying—you should!
Written by Borror Properties Senior Associate, Jeff Tyndall.