Six reasons Gen Y isn’t interested in cars

Howard Tullman gives 6 reasons in answer to the question “Why doesn’t Gen Y care about cars?

Emotional ties…

Mechanical abilities…

Technical constraints…

Economic realities…

Environmental considerations…

Political and regulatory changes…

If I had to vote for one of these reasons as being most important, I might go with number four. Owning a car is simply expensive and requires a long-term investment. Cheap reliable cars, say, under $5,000, can be difficult to find and the costs of insurance, maintenance, and depreciation are very real on top of expensive gas.

But, I think there are a few other reasons Tullman missed that could fit under his first and fifth reasons. Under emotional ties, it isn’t just that people don’t see owning a car as a “civic duty” but that Generation Y and younger have emotional ties to other objects like computers, video game consoles, and smart phones. Additionally, an interest in living in more urban areas might fit under environmental considerations plus the other bonuses such as culture and “scenes” present in big cities that are much more difficult to find in suburbs. Living in denser areas is seen as greener and such areas often offer more opportunities for mass transit or walking and biking.

A few other thoughts about the six reasons:

1. I think the interest in mechanical abilities has definitely shifted from analog objects, like cars, to digital objects. Generation Y is interested in “mechanical” activity but in a very different way.

2. Political and regulatory changes may discourage driving to some degree with stricter standards but this could also work in the favor of cars. If gas mileage increases significantly in the coming years, cars could be greener and small ones, in particular, could fit an urban ethos. The trick here might be making sure that these regulations don’t increase the costs of cars in such a way to discourage purchases. And, it remains to be seen if the federal government will significantly shift money toward mass transit and further encourage people to drive less.

Reasons young Americans are not buying houses at the same rate as prior younger generations

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?

Exploring the Gen Y home

The International Builders Show that recently concluded featured a Gen Y home. Here is what it involved:

The so-called Gen Y House, one of a trio of Builder Concept Homes constructed for the show, also departs from housing’s (and the trade show’s) long-running obsession with the baby boom generation.

Its 2,163 square feet marry indoors with outdoors: One all-glass exterior wall literally disappears, folding away to open the home to the patio and pool. The party-hearty vibe is hard to miss…

It’s a wide-open floor plan that emphasizes flexibility and gives a nod to the fact that, being in Florida, relatives and friends are likely to show up to visit: There’s a separate studio apartment with kitchenette just off the front courtyard. That courtyard provides a roomy alternative to the traditional notion of a front yard. Out back, there’s that pool and hot tub; a separate entrance from the master bedroom leading to the pool practically screams “midnight swim.”

The architect said that homes have to have contemporary styling for this age group.

One architect quoted in the story suggests that Generation Y “can lead out of this [down housing] market.” Thus, it sounds like builders and others think there is a lot of money in designing homes for the younger generation.

Four thoughts about this home:

1. Does it work outside of Florida? This home seems to take advantage of its setting but it might look a little different for a Gen Yer in Minneapolis.

2. This goes along with a larger industry theme that smaller might be better today. Again, however, this home is not short on features and has a price tag of $300,000. This is not exactly affordable housing though it appears that people want to make clear it is not a McMansion.

3. Would this home stand the test of time? What I mean here is whether this home would look dated in 15 to 20 years or if it is so geared to a particular group that it would have little appeal for the larger market. Styles and accoutrements do change over time but I assume builders don’t want to limit who would purchase these homes.

4. This home seems to emphasize fun and entertainment. Would these homes encourage sociability in the long run or reinforce a lack of attachments to civil society a la Bowling Alone?

What Gen Y wants in a home

This is a headline that immediately caught my eye: “No McMansions for Millennials.” Some discussions at the recent National Association of Home Builders (NAHB) conference focused on the needs of this younger group of homebuyers. Here is a quick summary of what Gen Y wants:

A key finding: They want to walk everywhere. Surveys show that 13% carpool to work, while 7% walk, said Melina Duggal, a principal with Orlando-based real estate adviser RCLCO. A whopping 88% want to be in an urban setting, but since cities themselves can be so expensive, places with shopping, dining and transit such as Bethesda and Arlington in the Washington suburbs will do just fine.

“One-third are willing to pay for the ability to walk,” Ms. Duggal said. “They don’t want to be in a cookie-cutter type of development. …The suburbs will need to evolve to be attractive to Gen Y.”

Outdoor space is important-but please, just a place to put the grill and have some friends over. Lawn-mowing not desired. Amenities such as fitness centers, game rooms and party rooms are important (“Is the room big enough to host a baby shower?” a millennial might think). “Outdoor fire pits,” suggested Tony Weremeichik of Canin Associates, an architecture firm in Orlando. “Consider designing outdoor spaces as if they were living rooms.”

Smaller rooms and fewer cavernous hallways to get everywhere, a bigger shower stall and skip the tub, he said. Oh, but don’t forget space in front of the television for the Wii, and space to eat meals while glued to the tube, because dinner parties and families gathered around the table are so last-Gen. And maybe a little nook in the laundry room for Rover’s bed?

A few thoughts about these findings:

1. Proponents of smart growth, such as New Urbanists, should be happy. It sounds like the younger generation wants to live in more urban areas with more amenities and less sprawl.

1a. Is this want they will want in the long-term or is primarily an after-college thing? What happens when they have kids? What happens when they have more money?

1b. Are there enough housing units that fit these descriptions? I could see these falling into two camps: expensive places in trendy neighborhoods or cheaper places in rougher or neighborhoods earlier in the gentrification process.

2. Putting the word McMansion in the headline to describe the homes of a previous generation is an interesting choice. What exactly is meant by “McMansion”? Overall, it seems to be used as a term for all suburban homes. But then we get some subtleties of the term: cookie-cutter design, yards, jacuzzi tubs, lots of space, spread out. But to suggest that all suburban homes are McMansions seems to betray more of the headline-writer’s thoughts on suburban homes than it does to actually reflect reality. Just how many suburban homes are McMansions anyway – we don’t really have way to count this.

3. People at the conference discussed features of a housing unit that would allow it to be more social: bigger interior entertainment spaces, using outdoor spaces as entertainment spaces, etc. Does this suggest that this generation is blurring the line between the community and the home more so than previous generations? The characterization for decades of many suburban homes is that people drive out of the garage in the morning, drive back in at night, and barely interact with anyone else. Will these sorts of denser spaces lead to more community among Generation Y or will they simply use their entertainment spaces to interact with already-established friends?

Prescient EW bullseye quote: “My generation…would never watch a show called My Generation.”

I’ve wondered who is the target demographic for ABC’s new show My Generation. Will the generation who the show depicts (people around 28 years old who graduated from high school in 2000) actually watch or is this show made by and made for the over 40 or 50 crowd who are curious about these kids are up to?

I’ll be curious to know how realistic this show is or whether it is just full of the typical high school archetypes (the geeks, jocks, cheerleaders types). Unfortunately, the trailer suggests it is full of these archetypes: “the over achiever,” “the nerd,” “the rock star,” and so on.

Generation Y not saving for retirement

Businessweek writes about efforts to get employees of Generation Y to contribute to 401(k) and other retirement programs. Apparently, this is difficult as student loans average around $20,000 and average salaries for this age group have dropped 19 percent over the last three decades after adjusting for inflation.

If you are in Generation Y, be prepared to see more efforts (through social media, for example) to get you to contribute to retirement savings.

h/t Instapundit