We have talked before about the upcoming Millennial, or Gen Y generation that will number more than 80 million eventually, 7 percent higher than their baby boomer parents that gave us such high economic growth in the 1980s and 90s. And chances are they will fuel similar economic growth as they mature in the 18 to 37-year age brackets, including a large boost to housing.
Why? Because favorable demographics is the main driver of economic growth and jobs, say Demographers, and millennials are the right ages for having families and expanding the work force of eligible workers.
A record number are currently still living with their parents and staying in school. Who can blame them with the housing bust and current slow recovery? But that’s going to change. For instance, Forbes Magazine likes their work prospects. “No generation before has had as much access, technological power or the infrastructure to share their ideas as quickly as the millennials. They are used to speed, multi-tasking, and working on their own schedule. These can be great assets in a knowledge economy which values end results over the process.”
In fact, it is already happening. The US birthrate is up for the first time in 5 years, reports the National Center for Health Statistics. Though these millennial mothers may have fewer babies, there are more of them, hence the overall increase. And they are waiting longer to have babies, with teenage pregnancies down 10 percent from 2012 to 2013.
Whereas, the 2013 preliminary birth rate for women aged 30–34 was up 1 percent from the rate in 2012. The rate for women aged 35–39 was up 3 percent from 2012, reaching the highest rate for this age group since 1963. This is good news for future economic growth, which is currently in the 2 percent range. That’s because they will replace the retiring baby boomers in the workforce that have been the cause of so much doom and gloom about future budget deficits and care of the elderly.
They are considered optimistic, with 41 percent satisfied with the way things are going in the country, compared with 26 percent of those over 30, according to a US Chamber of Commerce Foundation study. “Optimism abounds despite the many tragic events that have shaped this generation, such as 9/11, terrorist attacks, school shootings like Columbine, the 2004 Southeast Asian tsunami, and hurricane Katrina. Political, economic, and organizational influences include the 2000 election, the impeachment of a president, the recession and the fall of Enron to name a few. As kids, they were tightly scheduled and many would say overindulged by helicopter parents. They were products of NCLB, reality TV, and an “iWorld,” where Starbucks is usually just a short walk away.”
There is a reason that millennials will boost the housing market, as they enter the jobs market. Rents are rising faster than interest rates and housing prices in many areas, making purchasing a home more affordable.
Job Growth Boosts Rents in Largest U.S. Rental Markets, says Trulia. Rents rose more than 10 percent year-over-year in five large rental markets – San Francisco, Sacramento, Oakland, Denver, and Miami. These five markets all had job growth ranging from solid to stellar, says Trulia economist Jed Kolko. Overall, rents rose 6.1 percent nationally, with rents increasing more in markets with faster job growth.
The Harvard Joint Center For Housing Studies also reports more favorable household formation, and so housing trends over the next 10 years in their State of the Nation’s Housing 2014 report.
“Given the current size of the adult population as well as current headship rates by age or race/ethnicity, the Joint Center for Housing Studies estimates that demographic trends alone will push household growth in 2015–25 somewhere between 11.6 million and 13.2 million, depending on foreign immigration. This pace of growth is in line with annual averages in the 1980s, 1990s, and 2000s, and should therefore support similar levels of housing construction as in those decades.”
So, why worry so much about future growth and budget deficits when we have a generation that might equal the purchasing power and job growth of the baby boomers? We really need to give millennials, born during much more trying times, the chance to prove their mettle, and it looks like that is already happening.
Harlan Green © 2014
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