Despite record low interest rates, young adults are not buying homes like many people think they should. Many people think members of Generation Y are crazy to not purchase now. What these people fail to realize is how the values of young Americans have changed and many of them do not want to be home owners anytime soon. Young adults no longer want to keep up with the Joneses because the Joneses lost their jobs, lost their houses and may never retire. Most young adults are waiting longer to get married, waiting longer to move to the suburbs and waiting longer to have kids1. There are no Joneses their age to keep up with.
The whole process of buying a house has not changed much over the past few decades. It is a buying process many young people find a nuisance2. It is filled with disclosures, uncertainty and, worst of all...banks. Let’s be honest, its a pain and maybe more than any other generation in history, young adults now have options to avoid many of life’s painful processes. Look how Amazon and Apple have changed how we shop as a society. Now think about the process of buying a home and closing on a loan. Is it any surprise young Americans want to avoid it.
Most young people value experiences much more than they value property. They would rather travel regularly or buy the newest iPhone and iPad every year over paying a mortgage. To them a mortgage means they are tied down and less free to make decisions. Gen Y’ers love their freedom and do not want to be strapped down by a mortgage. Many of their contemporaries may tell them they could buy a house for what they are paying in rent. By renting, however, they can leave their job and move to another city on a whim. They can decide to save up and work hard so they can take a few months off to travel. They can quit their job to start their own company. All of these are more possible by not owning a home and having the commitment of a mortgage. We are talking about a generation who has shown they value freedom of work hours and time off more than their salary.
I think it’s funny how many members of the older generation think the younger generations are impatient. Sure, in some things it may be true. But in life they are showing great patience. They are waiting until they are older to get married. Waiting longer than ever to start a family. They are saying no to expensive cars and yes to jobs with more flexibilty. The American Dream does not always include buying a house, nice car and high salary. It means being free to do what makes you happy. Older generations need to recognize younger generations may have a better idea of what happiness means than they ever did. Most importantly, young Americans are not going to let the Federal Reserve or anyone else tell them when they should buy a house.
These likely have a lot to do with decreasing the divorce rate as well. ^
The same goes for cars which is probably why Gen Yers are not buying cars like the baby boomers. ^