As if there weren’t enough pitfalls and perils to being a millennial, the 18-34 year-old generation faces a looming chronic housing shortage. It will most likely coincide with what has been described as “the great senior sell off” for baby boomers—specifically the boomers who own homes in the suburbs.
To simplify a complex multi-tiered issue, probably the ideal solution would be for millennials and boomers to develop a system of trading their housing. Millennials would be able to have the more spacious single family homes they need after they’ve partnered up, started a family, gotten sick of the concrete jungle and begun hankering after decent square footage and greenery (a yard) to call their own.
Boomers would be able to ditch their mortgages, cars, property taxes and the responsibility and upkeep of a home for a smaller more easily maintainable apartment/condo.
If only it were that simple! In reality the majority of millennials—especially in larger metropolises like New York, San Francisco, Miami and Los Angeles—are confined to apartments in these urban city areas because that what is more affordable. Single-family home prices in the suburbs are too high for first time millennial buyers so they stay in their apartments. Some even put off having families because they can’t afford it.
If they do manage to save enough for the 20% downpayment and have enough income to show that their mortgage payment will only be 30% of their income (the prerequisite for most lenders), they often end up buying condos or smaller older houses in rundown areas that they might not have the time or cash to fix up. Not ideal for those starting families looking for a great school district and leafy genteel areas for their children, is it?
It’s a misconception that the majority of millennials prefer the city life and a more shared and urbanized environment. According to Professor Arthur C. Nelson of the University of Arizona, just 25% of them do. The rest are trapped in that urban apartment scenario unless they opt out of large cities altogether and move to more affordable suburbs in places like Orlando, Austin and San Antonio. This has been increasingly happening.
Meanwhile, the entrenched boomers are hanging on for as long as possible in the hope that housing prices will continue to rise enough to ensure a comfortable retirement. As they get older and more infirm, the car-oriented suburbs further confine them to their homes, which raises more problems. Some predict it will be the mid-to- late 2020s when“the great senior sell off” will be in full force.
Joel Kotkin wrote in The Daily Beast recently about the imminent millennial housing crisis: “This isn’t about lifestyle choices. It’s about a system in which the boomers are protecting their wealth and views at the expense of the rest of us.”
But globalization is also very much a contributing factor when it comes to rising house prices. Kotkin overlooks how open borders and sanctuary cities contribute to the disintegration of the middle class and create a chasm between the rich and the very poor.
It’s clear that if things continue in this direction, a new feudal society is where we are headed.
The U.S. has seemingly been relying on foreign property investment to prop up the housing market for awhile now. For example, numerous properties in some areas of Los Angeles County are being bought by Chinese investors with cash.
People like Kotkin are in favor of globalism, yet somehow he doesn’t make the connection that while housing prices are driven up by foreign investment, the job market is being inundated with cheap foreign labor driving wages down.
Millennials tend to be pro-globalism and don’t see the connection between foreign workers and their own falling wages and under-employment. Millennials today are making less than their boomer counterparts were at their age, and this globalization they seem to approve of isn’t helping their salaries or their housing situation.
For conservatives who are aging boomers and own their own homes, this poses an ethical conundrum. Do they, for reasons of self-interest and greed, support globalist politicians and policies and continued property investment by foreign investors, which helps fuel the housing market and makes their retirement a little easier?
Or do they support nationalist politicians and seek to halt any more foreign investment by keeping it American? In that scenario, home values may eventually decline to such a point that they are affordable to their fellow American millennial first-time buyers.
As awful as this may sound to retiring boomers, I see it as a fresh opportunity for innovation. Firstly, millennials don’t actually want homes quite like their boomer predecessors. They want less square footage than their parents’ generation did, and prefer to walk more. And with the rise of Uber and Lyft and so many millennials ditching car ownership, big garages and driveways are less necessary.
The impending housing crisis isn’t just about boomer homes that are too pricey. It’s about millennials wanting their homes and suburbs to be structured differently than they were for previous generations.
The solution is for more urbanized suburbs that are less dependent on cars and more walker-friendly. The detestable large homes and McMansions might be revamped and redesigned into more attractive buildings for amenities.
But the bad news for millennials is that right now these new affordable, more compact homes in the suburbs that cater more to their lifestyle aren’t being built. Instead, developers and investors are sadly still doubling down on the main urban areas and building more mega apartments and condo complexes.
It may well take a housing crisis to get developers and investors on board with architects, engineers and green innovators to redesign our suburbs and cities. However scary the looming crisis will be, if we embrace it as an opportunity, many of us will be able to better our lives and how we live.