The crippling cost of housing
In 2019, Harvard’s State of the Nation’s Housing report found that 37.1 million US households were “housing cost burdened,” while 17.6 million households were “severely cost burdened,” spending half or more of their income on housing. This problem doesn’t only exist in the US. In England, 7.6 million people had at least one major housing problem relating to overcrowding, affordability or poor-quality properties going into Covid-19, and as of March 2021, 1.4 million households were on the housing waiting list.
Borrowing from the Bank of Mom and Dad
In 2019, our Bank of Mom and Dad study found that in the US family and friends had supported the purchase of $317 billion worth of property in 2018, accounting for 1.2 million homes. If the Bank of Mom and Dad were an actual financial institution, it would have been the Number 7 housing lender, one of the top 10 US mortgage lenders. This year we undertook a new study, zooming in on US millennials, their financial issues and their attitudes around house purchase decisions.
Millennials are attracted to cities
Six out of 10 millennials live in cities of more than half a million people or nearby suburbia. Nearly half (47%) of those aged between 35 and 40 live in large metropolitan areas, while millennials aged 30 to 34 are more likely to live in suburban towns. The youngest, who are between 25 and 29, prefer the largest cities (24%) or suburbia (25%). 73% of those who don’t own property, rent; 16% live rent-free with family or friends; and one in 10 pay rent to live with friends or relatives.
56%
The majority of millennials find home ownership where they live ‘hard’ or ‘extremely hard’ to afford, rising to seven in 10 of those in large metropolitan areas.
Half of US millennials want to move
Nearly half of those we surveyed — particularly the oldest millennials and those living in big cities — are happy with their current location. However, the other half would like to move to a different area — between 30% and 40% would prefer to move to a smaller town. Within that group, 66% currently live in cities of over half a million inhabitants and 69% are older than 35. Many of the youngest millennials would like to live in a larger area than where they live now.
62%
The youngest millennials are the least happy with where they live and six out of 10 want to move.
Why do millennials want to move?
These days, coming out of the pandemic, nearly a quarter of millennials would move for job opportunities. Among the youngest, 29% would move for work. However, across all age groups millennials are strongly influenced by cost: 37% said they would move to a smaller area for affordability. Sluggish income growth and the skyrocketing cost of housing appear to be at the root of the problem with 36% of millennials finding home ownership hard to afford and a further 20% saying housing was ‘extremely’ hard to afford.