Home Ownership Doesn't Make Sense For Millennials in 2013


We've seen a few monikers for the generation of Americans born from about 1980 to 2000 — Generation Y, New Boomers, and millennials most prominently. Meanwhile, the British and Australian media have also dubbed these young adults as "Generation Rent."

That term hasn't really caught on in the U.S., perhaps since our American Dream doesn't support the notion of renting. Our American history is steeped in pioneering, claiming land, and ensuring the privacy and protection of our families by virtue of having our own generous space, our fortress, our security, our comfort. Our tax policies reward home ownership, and we know very well from the economic crisis of recent years that the financial industry is compelled to prop up home ownership even under stress as long as possible and even to a breaking point. Our millennial generation may redefine the American Dream out of necessity or a shift in values. It's certainly apparent that if home ownership remains the Holy Grail of American prosperity, it is being delayed for many of our young adults.

It's understandable that millennials haven't emphasized home ownership. More than 50% have attended college to some extent, and they are the first American generation to achieve that statistic. College life and its associated expenses aren't just obstacles to buying a home, they simply postpone it if nothing more.

The millennials are well known to wait longer than previous generations to marry and start a family, and this is a cultural tendency that has evolved by degrees since the introduction of highly accessible birth control. Dr. Jeffrey Jensen Arnett, author and research scholar, coined the phrase "emerging adulthood" in the early 2000s to capture the distinctions of our younger generation's transition to adulthood. In his 2004 book, Emerging Adulthood: The Winding Road From the Late Teens Through the Twenties, Arnett points out that emerging adults of the 21st century certainly want and expect to have families and homes, just not yet.

"Adulthood and its obligations offer security and stability, but they also represent a closing of doors — the end of independence, the end of spontaneity, the end of a sense of wide-open possibilities."

On top of that, our economy is in a painfully slow recovery and employment is of grave concern to many millennials. Big surprise. But what might surprise many of us among Boomers and Generation X is that our children and grandchildren are not responding with particular bitterness at large. They are not responding with sorrow that they may be forced to reinvent the American Dream. They candidly accept it, and they are doing what any generation reaching adulthood during national crisis would do: they are surviving and crafting a form of existence that can work for them right here, right now.

Of course we know that more  live with their parents a little longer than the 20-somethings of bygone decades. We know that they tug at mother's purse strings a little longer (although the research shows much less of this than one might expect). I'd ask if this is such a terrible thing — the idea that families might remain more closely knit and interdependent a while longer?

As corny as it may sound, we live in a new era, and the old rules simply do not apply. Responsible parents should and do administer a degree of tough love, nudging their young from the nest, but I doubt it's something to condemn if a parent wants to offer their child a few extra years to achieve stability. Meanwhile, it just isn't happening to the widespread level that so many want to believe. Young adults are taking responsibility for themselves. Their own peer culture does not smile on living at home with mom and dad. Of course they want their independence. They would prefer to live communally with a few housemates if nothing else, and their tendencies toward serial monogamy provide opportunities for cohabitation as well.

Basically, they're making it work. They are playing the hand that has been dealt to them.

I've interviewed about 60 millennials in great depth, requiring 2-3 hours typically. I'm kicking myself now because while I asked them many questions about plans for marriage and family, I forgot to ask them a simple thing: when do you want to own a home? But my many hours getting to know them allows me a presumption regarding their answer,

"When it makes sense. If it makes sense."

That then begs the question: for a young adult under 35 today, does home ownership make sense in 2013? Will it make sense in 2014? There is no one-size-fits-all conclusion. Naturally, for those with uniquely solid finances through wealth passed down or having landed lucrative employment, sure it might make sense, especially if they are in the greatest percentile of graduates who have less than $27,000 in debt. Consider that Generation Xers typically haven't blinked twice at a $30,000 vehicle 60-month car payment added to their mortgage debt, while millennials are driving less.

Consider also that millennials are quick to openly imagine themselves living and working in not just different parts of the country throughout phases of their lives, but in other nations as well. Every single millennial answered "yes" when I asked him or her if they would consider moving to another country for opportunity. A generation apt to move about may not be a generation apt to buy houses, at least not for quite a while.

Meanwhile, most of our interviewees agreed that the American Dream no longer exists as their parents and grandparents defined it. The house with the white picket fence will likely have to wait, and it might not happen at all for many from Generation Y.

Strauss and Howe, leading scholarly researchers on generational theory, offer considerable historical evidence that the millennials will embody a saeculum — a phase of our existence — which requires them to navigate the crisis that follows the past 20 years or so. Generation X has lived through what Howe and Strauss call "the unraveling." In their analysis, the millennial generation faces different parameters and details than the previous generations to face significant crisis, but they are nonetheless the generation destined to "replace the old civic order with a new one."

Strauss and Howe suggest that there is a natural order as to why some of our Boomers and much of Generation X have nurtured our children so carefully and to an extent that some believe is too much. The authors of The Fourth Turning and Millennials Rising explain that we've just raised what the cycles of history tell us is a "Hero" generation. Hero generations emerge once about every 80-100 years. The millennials have been armed with an arsenal of tools to compensate for and correct the mistakes of the past 20-40 years — technology, broad education even if at a high price, practical concern for the environment and sustainability, connectivity and awareness, an appreciation for capitalism combined with social responsibility.

Don't be fooled by what you might see as the slouching hipster herd at the local Starbucks. Not everyone can be a hero. But the best among them really don't even have a choice. They have to at least try to rise to the occasion, because the demands are so pressing. Look at us, scrambling about, pointing fingers, gridlocked in Congress — suppose we make even an inch of headway over the next 12 years ... Millennials will still have a steaming mess at their feet.

Who cares if they rent or own? We might say the economy cares. The housing market cares. My brother the contractor cares. My sister the loan officer cares.

The point we would miss with those answers is that our existence and America itself cannot be sustained as the current systems remain intact — and they won't remain intact because they are crumbling with failure and decay. Liberals, centrists and conservatives alike tend to agree on this: we're on borrowed time. We just can't agree how to move forward. Of course we've had our shining moments. Civil rights. Technological marvels. New and broadened opportunities for entrepreneurs. But let's not get into our screw-ups. I don't think the Internet has room to list them all unless we first purge off the porn and kitten memes.

But it's time to reinvent America and its systems of commerce, government, and social bonds. The millennials are the generation to do it. That doesn't mean that the best of our values won't be preserved, so let's not freak out selfishly and worry about preserving  our way of life for generations to come. Millennials are clear on many core values — they largely respect spirituality (even if they reject dogma), they are learning to be frugal, they are largely kind to their peers, they are a sharing culture overall, and they deeply value family (no matter if they roll their eyes when you ask them to stop texting).

The choice to rent or own becomes much less a defining choice for a generation destined for greatness, 80 million strong.