Millennials

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GUEST OBSERVATION 
Millennials are less likely to own a home than previous generations were at the same age.<a class="source" href="https://www.shutterstock.com/image-photo/sold-home-sale-real-estate-sign-168053771?src=MyyBDZW8tOfFl2Au5es9xg-1-2"> </a>
It used to be that everyone wanted to buy a home, seeking pleasure and security, as well as the potential for future wealth.
But younger Americans are buying homes far less often than their elders’ generations did, and that puts a large sector of the U.S. economy at risk.
<a href="https://www.urban.org/sites/default/files/publication/96221/homeownership_and_the_american_dream_0.pdf" target="_blank">Millennial home ownership levels</a> are dramatically lower than the those of previous generations at a similar age. In 1985, 45.5% of 25- to 34-year-olds owned homes in the U.S. By 2015, this had fallen about 25%.
Since the housing industry currently accounts for <a href="https://www.nahb.org/en/research/housing-economics/housings-economic-impact/housings-contribution-to-gross-domestic-product-gdp.aspx" target="_blank">15% to 18% of the nation’s gross domestic product</a>, any change in established behaviour could have substantial consequences on the larger economy.
<a href="https://scholar.google.com/citations?user=rBUYZnsAAAAJ&amp;hl=en" target="_blank">Researchers like me</a> who are interested in the future of the U.S. economy are faced with some difficult questions about how millennials’ behaviour is changing the housing market.
My recent research suggests that both increases and decreases in home prices can be directly tied to where millennials choose to live. If a long-term behavioural change is afoot, and this generation continues not to buy homes, it will very directly impact GDP.
Homeownership
Research has shown that younger generations <a href="https://www.stlouisfed.org/publications/regional-economist/second-quarter-2018/accounting-age-financial-health-millennials" target="_blank">lag behind</a> previous generations in terms of milestones like homeownership and marriage.
One of the assets that set previous generations apart is home equity. In 2001, Gen-Xers held an average of US$130,000 in assets, compared to millennials in 2016 that held almost 31% less.
However, assets attributed to home equity are subject to the whims of the housing market. Just ask anyone <a href="https://www.washingtonpost.com/business/economy/a-guide-to-the-financial-crisis--10-years-later/2018/09/10/114b76ba-af10-11e8-a20b-5f4f84429666_story" target="_blank">still underwater</a> on a home purchased before the financial crisis.
And home equity isn’t just vulnerable to large-scale economic upheavals. In fact, it’s constantly fluctuating.
Age and cost
I analyzed data from the U.S. Census Bureau and American Community Survey from about 800 of the most populous counties in the U.S., or about 85% of the population, in a study that has not yet been published. The data show a rather disconcerting trend.
If no one ever moved from one county to another, almost all counties would gradually grow older in terms of average age.
However, the migration of primarily younger individuals has caused an escalation in this ageing shift. Some areas are ageing much more quickly than expected. In those areas, home prices have been vulnerable to long-term declines.
In other words, the trend of rising or falling home values follows patterns of migration in the U.S.
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From 2010 to 2016, counties with ageing populations were about 50% more likely to have experienced a decline in home values than those counties that were becoming “younger.” Not surprisingly, counties that were becoming younger were often experiencing increases in both populations and in the prices of homes.
Two areas that provide an illustration of this are key to the oil and gas industry: the Midland-Odessa area of Texas and Ward County, North Dakota. Both areas have experienced not only a net decrease in the age of residents, but also a net increase in population.
This is far from a rural phenomenon. In Allegheny County, the Pennsylvania county that’s home to Pittsburgh, a similar increase in population has also decreased the average age of its residents.
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The cost of a home
Millennials’ migration to particular counties has fuelled <a href="https://www.corelogic.com/downloadable-docs/marketpulse/the-marketpulse-vol-8-issue-4-april-2019-screen-041719.pdf" target="_blank">speculative real estate transactions</a>.
In 2018, such transactions are reaching levels just below the pre-crisis highs, accounting for almost 11% of all homes sold last year. The prices are inflated by buyers looking to “flip” houses. This forces younger buyers to compete with the professionals, pushing them out of the markets they are migrating to.
Younger buyers are further frustrated by the cost of what economists refer to as frictions. Frictions include <a href="https://www.realtrends.com/wp-content/uploads/2018/06/RT_0618News.pdf" target="_blank">commissions that average 5% to 6%</a> of the purchase price, myriad inspection and appraisal fees, as well as mortgage and title insurance. All of this runs counter to the transparency and ease of access many millennials have become used to in the modern world.
Since the younger generation is <a href="https://www.urban.org/sites/default/files/publication/96221/homeownership_and_the_american_dream_0.pdf" target="_blank">better educated</a>, one might expect significant wage increases to counter some of these frictions. But recent graduates between the ages of 22 and 27 <a href="https://www.newyorkfed.org/research/college-labor-market/college-labor-market_wages" target="_blank">earn about 2% less</a> than their predecessors did in 1990.
If <a href="https://www.multpl.com/case-shiller-home-price-index-inflation-adjusted" target="_blank">home prices</a> had also stayed relatively flat, this likely wouldn’t be an issue. However, from 2000 to the present, average home prices have increased by about 3.8% annually, though this varies dramatically from county to county.
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As urban areas continue to attract more new residents, many young people may need to reassess the true value that home ownership offers. Meanwhile, older generations are likely just becoming aware of the impact of millennial migration on the American dream. If you live in an area that is ageing faster than the natural rate, the probability of your home value decreasing is very real.<img src="https://counter.theconversation.com/content/115830/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;">
Jimmie Lenz, Clinical Assistant Professor of Finance, University of South Carolina
This article is republished from <a href="http://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/how-millennials-are-affecting-the-price-of-your-home-115830" target="_blank">original article</a>.
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j.ballantyne1990-6AQqhLzZaK

How millennials are affecting the price of your home: Jimmie Lenz

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COVID-19 has affected everything from our work life, social life and our home life, leading to many of us making changes across one or more of these areas. Specifically, some empty nesters have found themselves back to running a full house with young adult children choosing to move home because of the pandemic.  
TAXIBOX, a mobile self-storage company has revealed the top suburbs across Sydney, Melbourne and Brisbane requiring storage, with locations popular amongst younger demographics such as Surry Hills, Paddington, Glebe, St Kilda and Woolloomooloo entering the list for 2020. With the pandemic leading to rising unemployment and many Australians, especially those in Melbourne who are re-entering lockdown and feeling the pinch – data indicates that the younger demographics (across all three states) are in the greatest need for storage.  
With the average cost of rent for a unit over 863 per cent higher than renting a TAXIBOX, Millennials that decide to pack up and store their possessions to move back in with mum and dad have the opportunity to save on average over $2,000/month (for Sydney dwellers) and over $1,500/month (for Melbourne and Brisbane residents).
 So what suburbs across the three states are in most need of storage solutions and how has this changed from 2019? Below are the top five locations across Sydney, Melbourne and Brisbane according to TAXIBOX data.  
Sydney 
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Bondi – 2026
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Bondi – 2026
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Surry Hills/Darlinghurst – 2010
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Newtown – 2042
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Paddington – 2021
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Maroubra – 2035
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Glebe – 2037
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Marrickville -2204
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Woolloomooloo - 2011
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Randwick - 2031
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Melbourne 
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Richmond - 3121
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Brunswick - 3056
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Clifton Hill - 3068
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Prahran - 3181
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St Kilda - 3182 
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Clifton Hill - 3068
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Brunswick - 3056
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Northcote - 3070
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Prahran - 3181
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Richmond - 3121
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Brisbane 
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West End – 4101
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West End – 4101
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Carina - 4152
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Carina – 4152
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Alderley - 4051 
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New Farm – 4005
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Corinda – 4075
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Morningside – 4170
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Nundah – 4012
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Kallangur - 4503
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Millennials move home and turn to storage lockers

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A new report by ING reveals almost half (46 per cent) of Aussie millennial home buyers say COVID-19 has made home ownership more achievable and a third (32 per cent) say they’ll buy a home within the next one to two years.
According to the report, millennials say they have used lockdown to get on top of their property goals by redirecting travel budgets to a home savings account (59 per cent), taking on a side hustle (37 per cent), and moving back in with their parents (36 per cent).
In order to save and buy a house sooner, half (50 per cent) of all millennial home buyers say they would consider living on the city fringes and the outer suburbs (45km or more from the city), the report found. More than one in five (22 per cent) say they plan to buy a smaller property in a cheaper area and rent it out until they can afford their forever home, while one in 10 (9 per cent) say they would consider buying a property with a friend or family member to get on the ladder quicker.
What’s more, millennials seem to be using different tactics and making significant lifestyle sacrifices to save for their future home. Almost half (48 per cent) say they will limit their personal shopping, reduce dining out experiences (42 per cent) and recreational drinking (28 per cent), give up their gym membership (21 per cent), and date less (24 per cent).
ING’s Head of Home Loans, Julie-Anne Bosich says: “What this research suggests millennials and Australians in general haven’t given up on the great Australian dream of owning their own home, they’re just re-thinking how they go about getting there and re-evaluating where they might want to live.”
“It suggests many people, especially millennials are being savvy by taking advantage of record low interest rates, government assistance and a weakened housing market to get on the property ladder.”
“The ING Future Focus: Homeownership report gives an overview of how the pandemic has changed how Aussies feel about their homes and home ownership and offers practical, money saving design tips for those wanting to make better use of space.”
Key findings from Future Focus: Homeownership Report include: 
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<li>The Australian Dream revived and re-defined: most millennial Aussies are setting their sights on owning one home (75 per cent), over flipping houses (8 per cent) and buying an investment property (10 per cent).<img src="blob:https://www.urban.com.au/069ff86b-b910-4d98-a3e4-46b67035260d" alt="page1image5863472" width="17.280000" height="0.480000">
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The new home ‘essentials’: Millennials looking to buy are prioritising fast internet (40 per cent), an outdoor space like a balcony, garden or patio (37 per cent) and space to exercise (27 per cent). They’re also buying for comfort (32 per cent), stability/security (21 per cent) and protecting their future (15 per cent).
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The home turned ‘Lifestyle Hub’: Since lockdown, a quarter of Aussies (30 per cent) say they now see their home as a ‘lifestyle hub’ and despite public spaces now open, many plan to continue exercising (39 per cent), dining (30 per cent), socialising (29 per cent) and working (25 per cent) more frequently at home.
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Buying property with a partner: Millennials (60 per cent) are notably more likely than Gen Z (41 per cent) or Gen X (35 per cent) to enter the property market with a partner, however one in five millennials (22 per cent) plan on doing it alone.
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Millennials set to take advantage of COVID weakened housing market: ING

66% of non home owner millenials plan to buy property within 5 years: Gateway Bank

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Millennials seeking to get a foot on the property ladder aren't interested in studio apartments, suggests a recent ING survey.
ING surveyed 100 millennials from across the country, and nearly half had their eye on a three or more bedroom home as their target.
Naturally, 50 percent of the people asked said the home they would 'most like' would be a three or more bedroom house, but 42 percent suggested that is the home they are most likely going to buy.
Only three respondents said a studio apartment would be their ideal purchase, as well as the most likely to buy. 
Click here <a href="https://www.propertyobserver.com.au/images/2018/5/17/millenials-studio.jpg" target="_blank">to enlarge.</a>
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Only seven percent want a one bedroom apartment.
The ING Millennial Homeownership Report found that 64 percent of young Australians (aged between 22-37 years old) prefer to plan ahead rather than live life off the cuff.
More than a third (38 percent) are currently saving for a house to buy in the next three years.
Despite their aspirations and good intentions to owning a property, 61 percent of millennials aren’t sure how much they need to save for a home deposit, including 40% of those that are currently saving.
For those that say they think they know how much they need, $76,000 is considered the average deposit amount to purchase their first home.
Melanie Evans, ING Australia’s head of retail banking, says their research shows that millennials are living for today, but are also planning for tomorrow.
“Millennials are often unfairly pictured as only living in the here and now, but they want what generations before them wanted; the security and financial stability that owning a home offers.
“Their homeownership aspirations are also rooted in traditional values like opting for a family home, being near green areas and family."
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Millennials

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