Millennial home buyers may want to skip-ahead to the next level up in new homes

Prediction is part of business, and home building--as reliant as it is on massive amounts of front-loaded capital investment and time--could not exist were it not for forecasts, projections, scenarios, and bets. Which is probably why we get it so wrong, time after time.

It must be the data. There's not enough of it. Or there's too much of it. Or, we have enough data, but it's not the right data. Or, we have the right data, but the specific data point we need is hiding. Or, worse, we see it, but don't recognize it. Or, we are certain of its validity, but we defy it. We're human, after all.

Take data on Millennials, for instance.

The Census has been saying it for a few years. Now Zillow has numbers in agreement that contend that a Great Recession-traumatized generation of 77 million American people, born roughly between the years 1980 and 2000, are "stuck," paying outlandish rents, shouldering big-time student debt, unable to act their part in a time-honored food-chain of transactions that begin with "hooking up," and shortly thereafter, buying a "starter" home.

Here's research analyst Cody Fuller, mining an ocean of data from Zillow and the University of Michigan Panel Study of Income Dynamics, reaching the very same conclusion:

While the role of first-time buyers in the market has stayed relatively constant over the decades, the characteristics of typical first-time buyers have changed dramatically. First-time homebuyers today are typically older, spend more time in rental housing, are less likely to be married and are buying more expensive homes than they were in previous decades.

Here's one of Fuller's charts, plotting the data points to back up the "insight" that Millennials are a financially besieged, slow-to-mature, helpless bunch, who need lower rents, forgiven student debt, and plum down-payment assistance programs to find their way into the housing food-chain.

Zillow plots data on changes over the years among first-time home buyers.

Believe all that if you want, but it's going to hurt your business as a home builder or developer if you continue to embrace the notion of Millennials as a generation lugging the dead-weights of financial sins and missteps past into their first households and early careers. Fuller may have the right answers, but I think his assumptions--and all of those who regard the Millennial cohort as a massive victim of economic, financial, and policy transgressions--and questions are wrong.

It says something important, we think, about housing and data. Housing, and its entire business ecosystem, produces a crush of data, from yesterday's release by the National Association of Home Builders monthly home builder sentiment index, to today's reading on housing starts, to tomorrow's benchmark on architects' billings, to Thursday's print of existing home sales, down to the submarket, sub-consumer segment level.

New York Times reporter Steve Lohr writes that 90% of all data created in history--4.4 zettabytes, which is 4.4 trillion gigabytes--is no more than 24 months old. An awful lot of that, we'd guess, is housing data. Housing data about Millennials.

Lohr's book, Data-ism, The Revolution Transforming Decision Making, Consumer Behavior, and Almost Everything Else, seeks to shed light on how and why Big Data is real, is meaningful, and is not going away. An important requirement to grasp about Big Data--when looking for its essential meaning--is to ask what questions all these data points are the answer to?

Data, in and of itself, goes the assumption we hear often, is a solution. A solution, solitary, is nothing without a need that precedes it. To fully understand, and act intelligently with data's guidance, we need the right questions as well as the answers.

Now, look again at the image at the top of this column. What does this image suggest to you? To me, it contains a powerful truth about Millennials, one that affirms that young adults--as a consumer market segment--are not acting as victims in the housing marketplace, for what it is.

Yes, statistically, there are financial hurdles for young adults and homeownership. But, more importantly, they're probably waiting longer for one reason. They like to "skip ahead," because that's what they do.