MFE Question: What is the Biggest Myth About Gen Y?

"The biggest myth about Gen Y is that this is a homogenous generation wanting largely the same things in an apartment. I often hear Boomers within our industry make comments like, “Gen Y’ers would rather drink battery acid than live in the suburbs.” Those kinds of broad-brush statements are wildly misleading. To this point, the apartment industry has honed in on only one niche within Gen Y: urban dwellers seeking a small unit within a high-rise boasting a rooftop dog park, a car-sharing program and a “We’re Green!” plaque. But data shows that while this niche is growing, it’s still only a niche representing a minority of Gen Y’ers–even within the biggest metro areas. Gen Y is the most diverse generation in American history. It’s not one-size-fits-all. We need to widen our scopes to target other large niches within Gen Y. Those who do will likely find success in the next cycle."

-Jay Parsons, Director of Analytics & Forecasts, MPF Research at RealPage, Inc.

“The biggest myth about Generation Y is that they are not interested in homeownership. They are in the demographic age cohort of 20-34 year olds, which is the cohort most likely to rent apartments, and they do indeed tend to be renters. But, as illustrated in the Fannie Mae Monthly Housing Survey, the majority of them want to own a home someday. As discussed in our May 2014 Fannie Mae Commentary, What Younger Renters Want and the Financial Constraints They See, 59 percent of younger renters aged 18-39 years old responded that they would prefer owning their home for both lifestyle and financial reasons. Indeed, 26 percent of younger renters responded that their primary reason for renting now is to make themselves financially ready to own a home. And although most of them remain pessimistic regarding their ability to get a mortgage, the vast majority plans to own their home someday, and about half plan to buy a home the next time they move. Generation Y may be the renter generation now, but it doesn’t seem to be their long-term goal.”

-Kim Betancourt, Director of Economics and Multifamily Research, Fannie Mae

“We spend a lot of time with millennials. They are definitely a unique generation and student housing has seen a shift in development over the last few years in order to meet their needs. Contrary to popular belief, millennials aren’t looking for luxury, amenity-rich housing with pools, tanning beds, arcades and high-end finishes. Millennials want the latest internet and IT services, easy access to campus, as well as study and social spaces. Unlike the generations before them, they are extremely sustainability-conscious, preferring to live in eco-friendly communities close to public transportation and green space too. Millennial students go on to rent apartments as young professionals and we’ve found that the lack of interest in luxury amenities remains true. This generation has faced some serious economic challenges and many are saddled with student debt upon graduating from college, so when it comes to finding an apartment that meets their needs, the added costs of  luxury amenities isn’t a priority. Millennials are practical and they place more value in easy access to shopping and dining, green features and high-quality technology services than luxury living.”

- David Adelman, President and CEO, Campus Apartments

"One myth is that the demand for urban apartments will start to diminish over the next few years as Generation Y moves out of urban areas to suburban areas once they have school-aged children. The oldest Generation Y cohort is 34 and the youngest is 14 today. This creates anywhere from another 10 to 20 years of demand for urban apartments as the youngest Generation Y cohorts matures and enters the workforce. I agree that the older Generation Y cohort will likely start moving to suburban areas over the next few years given the prohibitively high cost of raising multiple children in most urban environments. However, it is a myth that this older Generation Y cohort will live in the same suburbs where previous generations lived. Instead, Generation Y families will choose to live in walkable, perhaps inner ring suburban areas, as opposed to less walkable, less vibrant suburban locations that many Generation X and Baby Boomers live in today. Many suburbs that are near urban downtowns already offer a wide array of amenities from retail to restaurants and have good quality public schools-and many are starting to offer more amenities to attract the older Generation Y cohort."

-Melissa Reagen, Head of Research & Strategy in Research & Valuations, MetLife Real Estate Investors