Millennial Myth-Busters Part 1: Millennials Are Renting Out Of Financial Necessity, Not Convenience
It’s said that Millennials are discount-driven, career-entitled, apartment-loving tech dependents who have to be dragged out of their parents’ homes and forced into the real world. (Harsh much?)
Though these assessments may tickle the ear, the majority of them are not factually based. In a recent study dissecting the live, work and play preferences of Millennials around the globe, CBRE found the majority of these myths are grossly exaggerated. Take Millennials' housing preferences, to start.
In surveying 13,000 young adults in their 20s from a wide variety of countries, CBRE found that 49% of Millennials live with their parents, and most are doing so out of financial need. In some countries, like China and India, it’s the cultural norm to remain in the nest until married, but CBRE head of research in the Americas Spencer Levy tells Bisnow the majority of countries experiencing this trend are driven by high property values.
“Clearly our cultural customs of intergenerational living is more accepted in certain countries than others, but I think the broader point is this: Cultural differences aside, the fact that it is more expensive now to rent than ever before is making whatever was the cultural norm certainly more pronounced,” Spencer tells us.
The stay-at-home generation is facing heavy debt and cost burdens all over the world, making stay-at-home options more alluring. For those Millennials living independently, college debt coupled with rising property costs is steering the generation away from homeownership in favor of renting.
Though there is a small portion of Millennials renting for convenience, 65% of those surveyed are renting out of financial need. Although “Generation Rent” is spending more time renting than past generations, 60% of Millennials surveyed plan to buy. The issue is biting off the large down payment. For example, in the UK, a 25% deposit is usually required when purchasing a home, and with average prices across London around $819,226, Millennials would have to find $204,807 for the down payment. The disparity between these prices and Millennial wages is preventing a lot of buying, particularly for Millennials in Australia, Hong Kong and Great Britain.
“You’re seeing two trends come on top of one another. One, wage growth has been marginally stagnant until recently in the US,” Spencer tells Bisnow. “The other thing that has been an issue for some time is there is an affordable housing shortage and it's disproportionate in major metro areas that Millennials are congregating in...housing prices are outstripping wage increases.”