Declining rates of homeownership are nothing new, with each of the last 3 generations having a lower rate than the previous one. But why have home-ownership rates fallen so much for Millenials specifically? We believe that Millenials’ preference toward rentership can be attributed to 3 factors:
- They’ve been disillusioned by their experiences living through the Great Recession and seeing the economic/financial strife that episode caused for Boomers. This has permanently impacted their psychology (by what economists term ‘hysteresis’) and made them more skeptical of institutions and homes as a store of wealth. By the way, that could also be why this same group has embraced the DeFi movement and crypto-currencies.
- They’ve been burdened by large student debt balances relative to prior generations.
- Millenials have a definite lifestyle preference toward the convenience and mobility that renting offers.
Looking forward, Gen Z is still a bit of a mystery as most are not yet in prime home-buying age, but it stands to reason that they would exhibit even lower rates of homeownership given their preference toward more digital assets like crypto and NFT’s vs. physical ones. Only time will tell but this is something we’ll be monitoring closely as time goes on. After all, lower homeownership rates among future generations means more demand for safe, clean, and affordable housing!
