Each year, Pol sees his students graduate into the “real world.” But he’s not seeing them landing jobs as quickly as he witnessed in years past. “The way millennials are getting hurt is in job searches,” he says.
There’s one other problem slowing millennials down as well—debt. In the 2003 to 2004 school year, 56 percent of all dependent undergraduates owned at least one credit card, and one out of four carried a balance from month to month, according to the U.S. Department of Education’s National Postsecondary Student Aid Study (NPSAS) that year. The median credit card debt? $1,000. And one-quarter of students who carried a balance had debt exceeding $2,500. Meanwhile, two-thirds (66.4 percent) of students at four-year colleges and universities carried student loan debt, according to the 2006 “Trends in Student Aid” report from The College Board. “They’re taking on a significant amount of debt, in particular credit card debt,” Pol says.
A Harris Interactive study commissioned by Northwestern Mutual backs this up. It says that nearly 40 percent of Gen Yers have more than $10,000 in student loans. More than 20 percent have credit cards with balances of at least $5,000. Gen Yers know this is an issue: 30 percent of the 18- to 25-year-old set cite money as their most pressing problem; 70 percent say they don’t make enough money to lead the lifestyle they want to, according to the Pew survey.
Under these economic pressures, Gen Yers aren’t making the impact apartment owners expected. Instead of forming the coveted new renter-headed households the industry needs to keep vacancy rates low, Gen Yers are doubling or tripling up, even moving back home. “Some are losing their jobs and are forced to move back home with their parents,” says Jack Mc-Cabe, CEO of McCabe Research and Consulting, a Deerfield Beach, Fla.-based multifamily research firm. “Others are putting five people in a two-bedroom apartment to lower expenses so they can afford it.”
The apartment industry sees this as well. “We’re seeing more roommate situations,” says Jamie Gorski, senior vice president and chief marketing officer for McLean, Va.-based Kettler, a multifamily builder, manager, and owner with more than 1,200 units under management in the Washington, D.C., area. “In the past, people would take a one-bedroom [unit] themselves.”
For past generations, moving home or piling into a one-bedroom apartment may have been a lot to ask. But experts say millennials don’t have a problem with either option. For one, they’re extremely social. “They’ve been raised to be in a group setting,” says Charles Kennedy, senior vice president of DYG, a social and marketing research firm based in Danbury, Conn.
Wang, who grew up in a large family, says she would rather not live by herself at this point of her life. Even after she leaves her parents’ home, she expects to live with a college friend. “I don’t want to live by myself in a studio,” she says. “I had a little sister and brother, so I’m used to having a lot of people around. Even when I was in college, I had three, even four roommates.” And she’s not alone. Eight out of 10 people in the 18- to 25-year-old crowd say they have talked to their parents in the past day, and three out of four say they see their parents at least once a week, according to the Pew survey.
That doesn’t mean apartment owners aren’t trying to do things to keep Gen Y. Laramar Group, an apartment owner and manager based in Greenwood Village, Colo., with 19,774 units under management, allows renters to move to smaller units and even offers roommate matching services in the leasing office. “They’re your most valuable commodity,” says Dave Woodward, managing partner and CEO for the company. “You need to keep them in the system one way or another. If you keep them from breaking their lease or messing up their credit, it can help build loyalty.”
Camden, a Houston-based REIT that owns 52,716 units nationwide, also sees renters looking for solutions. “I hear of people coming in and saying they’re getting a roommate or want a smaller apartment to save a couple of bucks,” says John Selindh, vice president of marketing for Camden.
MYTH #3
It’s impossible to build affordably for Gen Y.
The economy isn’t the only thing forcing Gen Yers to move home or double up. Rental prices are, too. “Some are moving back home by choice because their housing has become so expensive in many markets,” McCabe says.
The problem: Gen Yers want to live where the action is, meaning urban areas. In fact, 12 percent of Gen Yers are expected to move into central cities, according to RCLCO, a real estate advisory firm based in Bethesda, Md. “Generation Y wants to be around urban centers, and we’re in those markets,” BRE’s Lange says. “They are hip, current—and they want to live in close proximity to work, entertainment, and transportation.”
