My wife and I share four young adult children, ages ranging from 33 to 21, 100% of whom we as parents would say "hasn't quite found his career niche." That's because we're nice parents. Still, there's another way we agree. That's in the feeling that while our home's door is always wide open and welcoming to them as they continue pursuit of said niche, the last thing either of us parents wants is for one of them to walk in that door and park for any extended time in the basement or one of the blissfully empty bedrooms of the house.
We'd go far--and have put our money where our mouths are--to keep the empty nest empty of a 30-something we adore, preferably at a safe, household-to-household distance. Our offspring, judging from their behavior, seem to be on the same page as their mom and dad on that one.
They are our millennials. We try not to see them colored by the broad brush strokes of social and business commentators who try to map age-ranges to housing choice behaviors in statistically meaningful ways.
Did you happen to see the Pew Research findings this week on the topic of young adults who live with their parents? What's striking about the data and its meaning--to us, anyway--is that although the absolute number and its significance are at record-setting levels, it's not the kind of record anyone's surprised by.
You say, hey, did you know that one in six 18 to 34 year-olds lives with his or her parents--making them more likely to live in their parents' home than with a spouse or partner in their own home for the first time in five or six generations? And the reaction might be, meh. The amazing thing is that it's not dismaying.
It's noteworthy, perhaps only to an old Baby Boomer, that the rates of 18 to 34 year-olds living with their parents in the '70s and '80s seemed to be at their lowest. Maybe the "Generation Gap" that seemed to delimit entirely different value sets between my parents' generation and their Baby Boom children served as a motivator that kicked household formations at the time to a higher level.
The insight of late, however, is that educational attainment and household formation correlate, as does educational attainment and employment rates, and educational attainment and earnings power. Did I mention that educational attainment seems to be a good predictor of many things economic, social, behavioral, and cultural?
We've even seen that educational attainment can actually offset the suppressing effect of college loan debt in household formation and homeownership. Here's an analysis that, while it doesn't suggest that declining homeownership rates in general have nothing to do with Millennial generation behavior, it does conclude that declining homeownership rates may have more to do with America's shifting household composition and cultural differences than it does with the scalable behavior of the Millennial generational cohort. Atlanta Federal Reserve economic policy analyst Ellynn Terry notes:
The data suggest that whatever is affecting millennials' homeownership decisions is applicable to older individuals as well. Further, it seems there are other, possibly larger, factors affecting homeownership, such as the changing face of America. Although homeownership rates by family types and racial groups are a bit above the level seen in 1994, the average person in 2015 was about as likely to live in a home that is owned or being bought. Thus, the shift in the distribution of the population toward racial groups and family types (and likely other factors) that tend to have lower homeownership rates is likely exerting an important influence on the overall homeownership rate.
A take-away from Terry's analysis is that married couples, one-person households, and nonmarried, multiperson households were all more likely to own their home in 2015 than in 1994. So, for certain household types, homeownership levels are solid, and one can model future homeownership levels to educational attainment and marriage. That's where the key indicators are for the immediate future of demand for homeownership among young adults, the oldest of whom are turning 35 this year.
BUILDER sibling Metrostudy notes that in many local markets, Millennials are the leading new-home buying segment, noting that 35-and-under buyers outnumber Baby Boomers in 88% of the top 100 core based statistical areas for home sales activity, and eclipse Generation X buyers in one out of three CBSAs.
Thing is, it's one out of three Millennials who's graduated with a degree from college, and so the pool of prospects in this age group is most likely a subset of the broader 3.6 million births in 1980 who comprise the basis of the prospective buyer universe. The ones with degrees, with reduced or paid-off college debt, and who have moved into or toward becoming a married couple are the likeliest of prospects.
Home buyers don't only look at what they currently have and earn, but what they can predictably bring home as their payment power. So, the Millennial wave is just beginning.