With rental fundamentals plummetting over the past six months, there’s been a lot of speculation that Gen Y job losses have fueled the decline. A new report from The Futures Co., a research firm based in Chapel Hill, N.C., backs that theory.
Of the 25,000 millennials The Futures Co. surveyed, 15% of those aged 16 to 30 have taken a pay cut this year; 11% of that group had been laid off. If you look at millennials aged 21 to 30, they are more likely to be working, though the numbers get even worse—14% were laid off, and 17% of those employed have taken a pay cut. By comparison, 13% of the approximately 600 Gen Xers surveyed and 8% of the approximately 600 Baby Boomers surveyed were laid off last year.
These findings don’t surprise Louis Pol, dean of the College of Business Administration at the University of Nebraska at Omaha. “My sense is that they [millennials] were hit harder than the average person in the workforce,” he says.
And it’s little surprise that apartment owners feel these trends as much as anyone, with 54% of millennials aged 16 to 30 still living with their parents. “We are seeing the trend of ‘doubling up’ or moving back to parents' homes for younger renters in this recession but have not noticed a disproportionate share of job losses,” says Robert Lee, senior vice president of JRK Birchmont Advisors, a company with 38,000 units in 26 states. “We are noticing more pronounced job losses geographically in markets tied to manufacturing and construction.”
Of the 21- to 30-year-old millennials living their parents, 56% said they were trying to save money, and 16% said they had to move home because their employment situation changed. “They're staying at home because they can't afford rent,” says John Page, research director for The Futures Co.
When they do decide to live on their own, Page says homeownership will be a consideration. In the next five years, 33% of millennials aged 21 to 30 said they plan to purchase a home, while 15% of Generation Xers and 6% of Baby Boomers said they plan to purchase a home in the next five years. And 34% of those millennials said they think there's more of an opportunity now to purchase a home than there was before the recession, while 22% of Xers and 17% of Boomers felt likewise.
Still, the study says two-thirds of millennials aren’t planning on buying. “There’s still a considerable amount that will likely continue to rent during that time period, too,” Page says. “There’s a certain amount of freedom that comes with renting.”
Pol also wonders if millennials will want to give up that freedom. “Do they even want to own a home right away or do they want to rent? Do they want to rent maybe for a longer period of time?,” he asks. “Will Gen Y have more difficulty getting loans, especially if there’s a period of time where they’ve been out of work?”
Regardless, Page thinks millennials will end up leading the recovery. “Millennials are actually better positioned to lead a lot of the recovery as we look into the next years,” Page says. “Even though millennials have had some setbacks, we do see where they’ll have a large role in the recovery.”