PayLease is a great place to work for millennials, but don’t take our word for it! In May of 2015, we were featured on the Best Places to Work for Millennials list, sponsored by the Center for Generational Kinetics. Millennials comprise 50% of PayLease’s employee base, which provides a unique opportunity to do some interesting research.
We sent out a short questionnaire to our millennial employees to see what renting or home owning trends presented themselves in our small, but proximate, sample. Our employees were asked to fill out the survey, and forward it to their friends and family who were millennials. Since the methodology was very casual and informal, it was in no way intended to represent a relevant sample size of millennials. However, within the results we received, there were trends that closely mirrored the market as a whole.
We received 122 responses in total. 72% of these millennials are renters, and spend an average of $1,694 per month on rent. Based on their reported yearly income, this means that our millennials are spending anywhere between a quarter, and half of their monthly salary on this one expense.
This is unusually high considering that anyone spending more than 30% on rent is considered “cost-burdened”. It could be because 75% either live alone, or with 1 roommate. The location of these respondents – mostly San Diego or Chicago- could also be a factor. Average rents in San Diego and Chicago are $1,7006 and $2,0007 per month respectively, compared to the national average of $9928. Both of these factors would have a large impact on our millennials’ rent-to-income ratio. Our survey respondents stated that location and monthly rent amount were by far the most important features when choosing a community, followed by size and parking availability.
The large majority of millennials who choose to rent is mirrored in statistics about first-time home buyers. According to Zillow, the average age of first-time home buyers is 33 years old2, up from 31 in 20143. However, a sizeable amount (83% of renters), stated that owning a home was a major life goal. The biggest obstacle to purchasing a home was saving up enough for a down payment. Difficulty saving up for a first home purchase is not surprising when you consider an average of $28,400 in student loan debt per graduate1.
Despite the obstacles, millennials do still want to own, but reasons for owning may be different from earlier generations. Many buyers are purchasing homes that they view as an investment, rather than a home they’ll live in for the rest of their lives4.
As these market movements continue to evolve and shape the industry, it’s interesting to think about what the future will be like. A recent study by Better Homes and Gardens revealed that current teens, part of Generation Z, still hold on to the American Dream5. The property management industry will certainly have changed by the time these teens prepare to buy their first home, but the fundamentals will invariably stay the same.