Sunday, June 5, 2016

The Renter Generation

They are referred to as the Millennial Generation. They are those born roughly between 1982 and 2004 (as defined by Howe and Strauss who coined the term "Millennial")  meaning they are now those between the ages of 12 and 32. However, they might also be considered the Renter Generation.

This is a generation that is generally adverse to commitment. They live for the "here and now" rather than the longer term. They don't want to "own it", they would rather just "rent it". Why be tied down and lose your flexibility?

Millennials are now the largest generational cohort in the United States. There are now more Millennials than Baby Boomers and this generation will dominate our country over the next 35 years.

We are already starting to see the effects of the Renter Generation.

Consider the rate of homeownership in the United States.  From a high of 69% in 2004 (the year that the first Millennials turned 22) the numbers of those living in a home they own has dropped consistently.

Homeownership today (63.7%) is lower than it has been in over 30 years.

Of course, these people have to live somewhere. You see it in the significant increase in renter occupied housing units. 10 million rental housing units have been added since 2004.

As I travel the country I see a lot of apartment construction. However, I don't see much condominium construction. Many real estate developers will tell you that the market is just not there for condos in most major markets. The reason---Millennials would rather rent than own.

Millennials are also more apt to lease a car than older generations.

A big reason that Millennials rent is that most are single. Few are committing to marriage at the ages that previous generations have entered matrimony. Just 26% of Millennials are married by age 32. 48% of Boomers were married by that age and 65% of the Silent generation had tied the knot by then.

The reasons for the delay in marriage ages is complicated and seems to be driven by several factors. Attitudes towards and the availability of pre-marital sex is one factor. In my day it was sometimes said that there was no need to buy a cow when you could get milk for free. Perhaps that is a reason. Another factor some have cited is the self-absorbed nature of many Millennials. San Diego State University psychologist Jean Twenge, who studies generational differences puts it this way.

“Trying to live with somebody else and putting their needs first is more difficult when you have been raised to put yourself first,” 

Of course, the tremendous amount of student debt that this generation has taken on is also a big factor in delaying marriages and buying homes. However, this is itself an indication of the "here and now" life. A lot of this student debt is taken on without any seeming recognition that it needs to be paid back. Prior generations worked and saved or went into the military and used the GI bill to go to college if they could not afford it. That is no longer the case. The attitude today is that I deserve it. I want it now. I don't want to wait. This is also a renter rather than an owner outlook.

Millennials also have a reputation as job-hoppers. They are less inclined to be committed to a single employer and are more willing to switch employers. Rather than "own" their job or career it seems that many are also "renting" when it comes to their employment status. They are not in it for the long haul, they are only hanging around until something better comes along.

The same seems to be true with their political choices. They were big supporters of Barack Obama in two elections seemingly putting short-term interests ahead of the long-term realities they face. In almost every case, Barack Obama's positions were contrary to their own self-interests. In effect, they "rented" their vote rather than "owning" it.

I wrote this in my blog post, "Will History Be Kind To Millennials?" in 2013 and it seems even more accurate today.

When the history of the Obama era is written, I think one of the ironies that historians will focus on will be the level of support that younger voters provided for Obama that will clearly be seen as having been against their self-interest when viewed in the fullness of time.
I don't envy the future of our young people.  They are on the hook for $16 trillion and counting in federal debt.  They are the hook for many more trillions in public sector pension costs for state and local workers.  They are on the hook for over $1 trillion in student loans that are not dischargeable in bankruptcy.  More than 1 in 10 of them is unemployed and 1 in 2 is underemployed.  The poor economy and low interest rates are keeping millions of Baby Boomers in the workforce and blocking their career advancement. They almost certainly will pay much more into Social Security and Medicare than they will ever get out of it or they will end up caring for Mom and Dad somewhere down the line.
However, almost 2 out of every 3 of them has no one to blame but themselves.  They had a choice to make for their future but were more enthralled with "cool" than with "competent".
It is something I don't understand.  It is something that I don't think history will understand.  For the sake of their own future, I hope the so-called Millennial Generation will soon understand what is happening to them and demand real change.  It is their only real hope to create their own history. If not, they will just pay for ours.

The time has come for the Renter Generation to start being OWNERS of their lives, their careers and their government. If they don't own it, they will most assuredly OWE and OWE and OWE and OWE some more. Renters can win in the short-term. However, they almost never win over the longer term. To prosper and win, you need to "own it."

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