With a background in content marketing, public relations, and social media management in a variety of industries, Katelyn strives to deliver high-quality educational content to advisors in the financial services industry and empower them with tools to boost their marketing efforts through content marketing and technology.
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Tim Gurner, 35-year-old Melbourne property mogul, recently bashed the Millennial generation for its frivolous spending habits, stating, “When I was trying to buy my first home, I was not buying smashed avocado for $19 and four coffees at $4 each.” He went on to say that reality TV is a main cause of unrealistic expectations and extraneous spending. “This generation is watching the Kardashians and thinking that is normal – thinking owning a Bentley is normal,” he said.
The issues surrounding Millennials and homeownership, however, are much deeper than simply spending too much on coffee or expecting to own a designer car in their 20s.
Why are Millennials really not buying homes?
A recent study by Fannie Mae and the University of Southern California found that homeownership among young adults (25-44 years old) has dropped by 10 percentage points in the last 10 years. The causes of this shift include foreclosure crisis, a slow labor market recovery from the Great Recession, tighter mortgage credit, limited supply of entry-level home, and long-term social changes such as delayed marriage and childbearing.
The Great Recession rocked the Millennial generation as they attended college, beginning our careers, and starting families. It made a lot of us extremely cautious about spending, especially when it comes to extremely large financial decisions like buying a home.
Jo Lennan, lawyer, writer, and Oxford scholar, told 60 Minutes how much she disagrees with Gurner’s statements about Millennials spending. “It has never been harder for young and ordinary people to make a start,” she states. “The dice are not evenly loaded. They are loaded in the favor of investors.”
This generation watched as the housing market bubble burst, which resulted in many of their parents losing their jobs and homes. When you add that to our immense student loans, wages that are not increasing in accord with housing prices, and stricter lending standards, it becomes much more financially understandable why Millennials are waiting longer to buy their first home.
In addition to financial and political reasons for waiting to purchase a home (or never actually purchasing one), the Millennial generation is part of a massive culture shift. According to April Masini, relationship expert an author, “Millennials aren’t big on tradition.”
Huffington Post recently reported, “In every state, the share of 20- to 34-year-olds who have never married has risen sharply since 2000.”
Preparing Millennials for whatever future they desire
It is clear that there is a multitude of reasons preventing Millennials from homeownership. Whether it be that their financial situation is not stable enough to support the switch from renting to owning or maybe they just would honestly prefer to continue renting until they start a family, it is important to have these discussions with your Millennial clients.
Advisors must work with them to ensure their financial plan supports their homeownership dreams or lack thereof, and technology can help show the impact on their financial future of these decisions. By leveraging financial planning technology like NaviPlan® that not only produces the most in-depth, sophisticated, and precise plans in the industry but also provides 24/7 client access to the information through the client portal, advisors can empower their Millennial clients to reach any financial goal they set.
To learn more about the benefits of leveraging a flexible financial planning platform with clients of any generation, click here.