Owning a home may be a pipe dream for millennials. Here's how members of Generation Rent differ from their parents.
One of the most depressing news stories I've read in the last few years is one asserting that the Millennial generation will be the first to be worse off than their parents. This factors in salaries, health costs, and social security, but also our prospects (or lack thereof) of ever Owning A Home, that classic American declaration of independence. Recent numbers are sketching out a harsh reality: that our hopes of owning property may be unrealistic, and that we will become a generation of renters in the next few decades. Here are a few ways Generation Rent differs from their parents:
Renter cities aren't just coastal anymore. New York and San Francisco are famous for being towns full of renters, but that sensibility is expanding rapidly in the aftermath of the recession. More than 500 mid-to-large American cities, including Birmingham, Miami, and Phoenix, have seen an increase in the number of rental homes, and that number isn't likely to go down anytime soon.
Despite our lack of purchasing power, our need to invest is greater than ever. Jack Donaghy once told Liz Lemon that purchasing a home was the best investment you could make, and he's not wrong. But as our chances of buying a house go down, our need for a long-term investment has gone up relative to our parents' generation because of an uncertain future for social security, fewer jobs with 401ks and pension plans, and higher life expectancy.
If we do own, parents are footing the bill a lot more often. For our parents' generation, it wasn't uncommon for middle- and upper-class families to help out newlyweds with purchasing a house. But now, if an adult under 30 owns a home, it's much more likely that their parents helped them out with the down payment. And since we're getting married later, we're much less likely to get an extra boost from wedding money.
So what do we do? We loosen our grip on the nuclear family that lives in a huge house all by themselves, for one. Pooling resources and buying multiple-family homes, or simply living with friends for longer than we're used to, is already becoming more common in big cities, where the housing market was prohibitively expensive even without a recession.
We should also draw our attention toward the affordable housing movement, which puts pressure on local governments to expand rent-controlled and rent-stabilized apartments, as well as supporting the traditional concept of co-ops—nonprofit complexes that require very small equity payments. When there is some assurance that your rent won't all of a sudden go through the roof when you're 70, making a huge property investment doesn't seem so vital.
It doesn't feel good to have fewer economic opportunities than our parents. But maybe the prospect of long-term renting is a reality check that'll force us to shift our priorities a little.
For instance, yuppie communes could be pretty fun.