Why Aren't Twentysomethings Buying Cars or Houses?
Join the debate over this month's business column: Is "the cheapest generation" just a creation of the recession, or also part of a bigger cultural trend? If you're in your 20s and early 30s, tell us your story and we'll publish it.
Why don't young people buy cars and houses like they used to?
That's the question Jordan Weissmann and I addressed in this month's magazine. The headline -- which I love and consider provocative, but did not choose -- is The Cheapest Generation. Cheapness, in this case, is not inherent. It is not in Generation-Y's DNA or in our brains. It was bestowed by circumstances -- chief among them, the Great Recession and the rise in student debt. Unemployment is higher for young people than any other group, and median wages have declined for 20somethings -- by 6% -- more than older cohorts.
Things will get better. As the economy recovers, households will form, and this generation will look more like the generations that came before it. We'll have babies, and we'll buy houses and cars. But based on our reporting -- speaking to real estate agents, marketing executives at major car companies, and urban economists -- there is a widespread sense that this generation will not buy as many cars or houses (or as large cars and houses) as our parents.
There are so many reasons why. One Ford source listed eight factors behind the company's assumption that young people won't buy as many Fords as their parents. Some reasons will be obvious to you: It's hard to get a loan when you're in debt and your middle-class job is paying a lower real wage than it did ten years ago. Some reasons, I hope, will surprise and challenge you: Some car executives see mobile technology as a direct competitor to car ownership, because smartphones (in addition to being expensive) have partially replaced cars as symbols of young adulthood, connectivity, and social cache.
Not everybody thinks that Jordan and I got the story -- or, perhaps, the emphasis -- right. On Hacker News, a popular dashboard of tech and business stories, the top-rated comment begins, sardonically:
I'm sure it has nothing to do with the fact that 78 hours of minimum wage work could pay the rent in 1980, compared to 109 hours in 2010 [1], along with the other associated cost-of-living increases over the last three decades that have come without comparable increases in wages.
I doubt that most people who felt financially secure and could afford a new car wouldn't want to own a new car. Nobody really enjoys driving a beater, or being forced to walk or ride a bike everywhere (aside from doing it for the enjoyment of it), or trying to negotiate for rides with friends. Public transportation in most of the U.S. is awful, so I don't see many people choosing that over having your own shiny new car.
So the article briefly touches on the economic pressures facing young people in mentioning the recession and student debt, but it spends most of its paragraphs trying to paint some kind of cultural picture of "Millenials" as being a neo-beatnik generation that worships sharing.
No, it's the economy, stupid...
Our column is a story about the future. The nice thing about writing a story about the future is that nobody can prove you wrong. The downside is that we can't prove that we're right. I'm more or less persuaded that my generation will shift away from the deep suburbs and live closer to cities where the houses will be smaller (or rented) and where denser living will encourage a shift toward public transit and away from multi-car households. But who knows?
So that's where you come in. If you're in your 20s and early 30s, tell us why you have or haven't bought a house. If you're outside that age range, lend us you theory. Is "the cheapest generation" an invention of the cyclical downturn that will change when unemployment drops, or is this the beginning a small structural change -- for better or worse?
We'll publish the best comments on the site as they come in.