Even though the housing market has shown tremendous strength in California this year, millennials are not as active in the housing market on a percentage basis as previous generations. A major contributing factor of this is the high unemployment rates for those under 30. As a result a staggering number of millennials are moving back in with mom and dad.
What are the ramifications for the real estate industry? Examples of previous generations gaining full-time employment and saving for a down payment on a house are no longer a reality as the unemployed or underemployed move back home. While these statistics could be attributed to the recession, there may be other factors contributing to junior returning home.
The latest brain imaging research has shown that higher-level thinking centers that evaluate risk do not develop until about age 25. The research showed that “early adolescence” is from age 12-14. “Middle adolescence” is from 13-17 and “late adolescence” extends from 18-25.
So how does this affect the real estate industry? For the 8.2 million who can’t find full-time employment, there is no chance to save towards a down payment on a house. They are left with their choices, find a rental or move back in with their parents. Moreover, if they have children it is even harder to save money for a down payment. This means a higher demand for rental property and fewer millennials will become property owners in their 20s or early 30s.
Also as many baby boomers want to downsize to put more money away for retirement they are having to maintain larger homes to in order to accommodate their “adolescent” adult children or aging parent. What makes the situation worse is that a large number of millennials expect their parents to provide room and board when situations become difficult.
Millennials are often cited as being the most highly educated and most optimistic of all generations, but over the last year or so researchers have started to refer to this group as the “lost generation.”
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