Much has been written and discussed recently regarding millennials and their tendency to wait on the purchase of a home.
Some have blamed tighter lending conditions. Others have blamed a difficult job market, underemployment, and/or stubbornly low wages. Another theory is that, having seen the real estate crash of the late 2000s lay waste to lifetimes of hard work and financial discipline for so many, some millennials are gun-shy about making the jump into home ownership.
And yet another theory being offered by developers is that there has been a paradigm shift and that millennials are simply looking for something different out of life.
Billionaire real estate mogul Jeff Greene has been quoted as saying that “millennials are much more interested in experiences than things — they would rather climb a mountain than buy five extra pairs of jeans.”
Others say millennials are leading a “growing demand for more efficient, affordable living space that is close to numerous amenities.” Despite earning wages that aren’t keeping pace with rising rents, younger generations still “want to live in the middle of restaurants, bars and entertainment areas.” And to lead this type of lifestyle, they are willing to sacrifice space, and often, ownership. For now, they are supposedly choosing social time over the traditional American dream of owning a home.
Apartment complexes offer people the chance to enjoy a new building with the latest and greatest amenities, the convenience of downtown living, and the lifestyle flexibility resulting from substantially smaller rent payments.
Many of these millennials are, in fact, looking to rent instead of buy. However, our renter clients are usually looking to rent simply because they cannot buy. Whether it’s not having enough money for a down payment, insufficient credit or some other factor preventing them from getting a loan, our renter clients are usually renting because it’s their only option.
There are also a disproportionate number of millennials who could buy but that appear “afraid to pull the trigger” on buying a home. These millennials are active online, attempting to monitor the market as closely as they can from their computers and smartphones, often appearing to be somewhat frozen in inaction due to information overload. And they sometimes wind up staying in rentals partially due to a fear of making the wrong decision as they try to time a market that simply cannot be timed.
We know that millennials, generally speaking, aren’t marrying, having kids or buying homes. Human nature says that this will likely change at some point.