...since their great grandmothers shook off their corsets and demanded the vote. They've led the charge on the work from home phenomena, completely upended the mainstream media with Instagram influencers, and made urban planners rethink the way they design cityscapes. Indeed, the live-work-play concept is a direct result of their demands for compact living.
So, with all this power, it's surprising that millennials are choosing to rent rather than buy homes. After all, owning a home, and getting a mortgage, was the American Dream for decades. Going into the next decade of the twenty-first century, not so much – renting is preferable to buying. Instead, there is a perceived Millennial housing crisis.
Up to a point, yes. Investors are buying "starter homes" sight unseen – for cash – before they go on the market. Any seller would prefer a quick cash sale to taking their chances with a traditional listing. Further, “starter homes" are defined as the homes (single and multifamily) priced in the bottom third of the local market, and only 20% of the homes on the market nationwide are in that category.
Adding to the shortage of those lower-priced homes is a simple fact that houses are more expensive – the first-time buyer is paying 39% more than they did 40 years ago. There are a number of reasons housing, in general, has gotten so expensive overall. Primarily it's that zoning for housing is a challenge in many cities, and the costs of construction have risen dramatically.
Adding to that, potential home sellers are either staying put because they can't afford to buy another home, or there is a shortage of properties and they're worried that if they put their house on the market it will sell, and they won't find anything to buy.
Another contributing factor to the Millennial housing shortage is that they're not interested in buying their parents' homes. Baby boomers are downsizing, but the market for those homes is shrinking – nobody wants overpriced, oversized and outdated homes in the suburbs.
Boomers were the driving force behind the rise of the McMansion in the go-go 80s, 90s, and early 2000s. Now that they're empty nesting and retired, they have big houses to sell. Millennials are loath to take on these too-big houses. They don't want to be stuck with too much maintenance, repairs, yard work, and real estate taxes. In short, they can't afford them.
Part of the Millennial housing crisis is due to the fact that they would rather put their money elsewhere. This generation typically wants more in the way of experience than possession, and that's helping fuel the turn away from big boomer houses. Travel is a big part of their lives, and they don't have any interest in putting all their money into buying and maintaining a house.