As a renter who doesn’t own a car and has written a lot about the merits of cities over suburbs, I am probably the target demographic for a recent The Atlantic column by Derek Thompson and Jordan Weissman titled ‘The Cheapest Generation’ about millennials buying cars and homes at lower rates than past generations. But even if you’re not a car-free urban booster, the piece is well worth a read.
Here’s the central question:
What if Millennials’ aversion to car-buying isn’t a temporary side effect of the recession, but part of a permanent generational shift in tastes and spending habits? It’s a question that applies not only to cars, but to several other traditional categories of big spending—most notably, housing.
And the supporting evidence:
Millennials have turned against both cars and houses in dramatic and historic fashion. Just as car sales have plummeted among their age cohort, the share of young people getting their first mortgage between 2009 and 2011 is half what it was just 10 years ago, according to a Federal Reserve study.
Go read the entire column, which devotes itself to a discussion of the underlying factors including the recession, urbanization, and even the impact of smartphones. And the authors have collected a series of fascinating responses here, here and here.
There’s a lot to discuss here – I’m particularly interested in the role of walkable, “urban light” suburbs – but for now I want to simply ask BostInno readers:
Do you own a car? A home? If not, do you aspire to one day own one or both of those things?
So why are millennials turning their backs on these purchases, and will they come around? Here’s how I break up the possible reasons from the column and elsewhere:
- Money – Thanks to the recession, young people don’t have as much of it.
- Urbanization – Young people prefer the cities more than previous generations (see here, here, here). That supports the idea that they’ll have less need for cars.
- Culture – There’s an argument that car culture is falling out of fashion. This seems less plausible for home ownership, as most millennials say they want to own a house eventually (here, here).
- Tech – The “sharing” economy, led by Zipcar and Airbnb, is enabled by the internet. I have a hard time parsing this from Culture above.
- Mobility deferred – Young people are in general more mobile than older people, by which I mean they move cities and jobs more often, except today’s youth have been less mobile than previous generations because of the recession. This matters because the less you’re moving jobs and cities, the more sense it makes to purchase a home. But my guess is that many young people, even if they haven’t moved much, still hope to, meaning that purchasing a home isn’t necessarily a wise investment right now.
For my part, I’m pretty convinced that car ownership for my generation will be down from previous ones, and I certainly hope to never own one. But housing seems less clear. The cultural factor seems questionable and urbanization doesn’t keep people from consuming housing. Finances will be a real issue, of course, but it seems totally possible that we’re seeing a deferral more than anything else.
What do you think? Do you hope to own one or both some day?
Fun fact from my research for this post: Boston isn’t losing young people nearly as badly as earlier in the decade.