Derek Thompson shows that younger Americans are not buying homes at the same rates as previous younger generations:
When older generations wonder what’s the matter with Millennials, they often judge their younger cohorts against such financial and social benchmarks as finding a job, getting married, and buying a home. These observations often come wrapped in weak science — “blame Facebook for their indolence” — or dripping with judgment — “blame their parents for making them weak.” The science is weak, but the observations are true. Fewer young people are finding jobs. Fewer young people are getting married. Fewer young people are buying homes.
Between 1980 and 2000, the share of late-twenty-somethings owning homes had declined from 43% to 38%. The share of early-thirty-something home owners slipped from 61% to 55% in that time. After the boom and bust were over, both rates kept falling. The rate of young people getting their first mortgage between 2009 and 2011 was chopped in half from just 10 years ago, according to a recent study from the Federal Reserve.
The reasons Thompson gives for this decline: rising student debt, lower (delayed?) rates of marriage, limited wages, and housing prices have increased.
Two things that I like about this:
1. Generational talk and “common sense” about the differences is indeed “weak science.” Many people provide anecdotal evidence (my children or students do this, etc.) tied to individual traits (they don’t have the same work ethic, etc.).
2. Because of this “weak science,” we do need to examine how structural forces affect generational behavior. Thompson suggests that broad factors in economics and society have pushed this generation of younger Americans into different actions.
One thing I think is missing here: there seems to be an assumption here that if the economics and social factors were right or similar to the past, this younger generation would buy houses at similar rates. What about the cultural component, the idea that a younger generation of American doesn’t buy into the traditional American Dream in the same way as previous generations? Of course, these structural factors can influence this rejection or adoption of the American Dream: if it is simply more difficult to buy a home at a younger age today, then people might pursue a different vision.
But I think there is growing evidence (see here and here as examples) that this younger generation genuinely values different goals than previous generations and owning a house is just not the same priority. Perhaps they have different values like wanting to be in culturally exciting areas (the creative class thesis). Attaining this and owning a home are not mutually exclusive but most suburbs would not fit this bill. Perhaps they do not desire long-term debt (the common 30 year mortgage) in a rapidly changing world or they want more freedom to be able to move and respond to changes in job markets and cultural and relational shifts. Perhaps they don’t want to have to maintain a home and would rather spend their time elsewhere. Perhaps they explicitly reject the materialistic or consumeristic approach they see in previous generations and instead prize friendships and fulfilling careers. If they do want homes, they want different kinds than in the past (see here and here) and perhaps don’t think many homes reflect their desires.
This is worth paying attention to: will the idea of the American Dream and the need to own a home change dramatically in the years to come because of both structural and cultural shifts?