Does an Attachment to Your Current Home Make You Stagnant?
by Carole Ellis
The millennials are at it again: they are “bucking tradition” with their living options and once again shaking up housing predictions because, in many ways, this generation is far less predictable than the ones prior. According to the U.S. Census Bureau, the latest millennial preference to interfere with the housing market is a distinct desire to stay right where they are. According to census data, only about one in every five millennials (defined in this case as 25-to-35 years of age) said that they changed their address in 2016. More than a quarter of Gen Xers and Baby Boomer moved during the same period.
Economists expected more millennials to start moving as the economy improved and job opportunities expanded, but today’s young adults simply do not appear interested in doing so. Overall, only about one in every 10 Americans of all ages reported having moved during the past year in 2016. That record-low number is largely due to millennials staying in place, and it has Pew economist Richard Fry worried. “They [young adults] should be fairly footloose, but they’re not,” he said. Fry added that the lack of mobility could indicate that opportunities for young adults may be more limited than they appear on paper, and added that barely a third (34.7 percent) of all households in the U.S. today are headed by a person 35 or younger. By comparison, nearly 40 percent of households were headed by a person 35 years or younger in 2010.
At first, it might not seem like a big deal if fewer Americans of any age move in a given year. However, young adults’ mobility tends to serve as a bellwether for the larger economy because they tend to be the most likely to move to pursue better employment and income opportunities because they are not as often constrained by children or a spouse. If young adults are not moving, then they could be experiencing more difficulties finding employment or moving upward in their careers than is currently registering on economists’ radar, or, alternatively, they could simply have a different set of values and priorities than previous generations. Fry, however, thinks it is important to consider that the younger generation may be “stuck in place” because they are not financially able to purchase a home in their locations of choice, which are largely urban, and are, as yet, unwilling to move to the suburbs or to a smaller town in order to be able to afford a home purchase.
Given that about one in every 20 millennials said that their move in 2015 was for the purposes of owning a home (compared to 14 percent of Gen Xers at the same age), the trends seem to indicate that home ownership could continue to decline, at least for the next five or 10 years. While it is inevitable according to most economists that the majority of millennial adults will, at some point, settle down and establish households, the kind of delay that seems to be in evidence presently could and probably will affect housing on a national level for some time. This is of particular significance since most housing factors are far more local. In the case of millennial housing preferences, however, is a far-reaching trend that could actually affect housing and real estate investors globally by directly influencing investment strategies across the spectrum.
Do you think millennials are important to housing trends? Does it matter that they are not buying homes?
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