For several years now, we’ve been hearing about how to
market to the Gen Y cohort, also known as Millennials or Echo Boomers.
Sure, they’re attracted to technology and
sustainability, but what if their attitudes about owning things like cars and
houses are completely different from the generations which preceded them?
According to a recent story in
The Atlantic magazine,
it’s possible that a perfect storm of economic and demographic forces have altered
the very way that this generation participates in our consumer culture,
potentially changing how we develop and build housing in the years ahead.
For those of us who remember driver training classes in high
school, getting that license meant gaining independence, demonstrating
responsibility and embarking on adventures outside of the local neighborhood. But that was then, and this is now. Back in
1985, adults in the 21-34 age range bought 38 percent of all new cars sold, but
by 2010 that capture rate had fallen to 27 percent. While more people could be simply buying used
cars, the proportion of teens with a driver’s license fell by 28 percent
between 1998 and 2008.
Enter the sharing economy, in which companies like ZipCar,
Airbnb.com and thredUP allow members to share, rent or sell goods which would
otherwise simply sit idle.
Yet according
to a ZipCar survey, it’s been the evolution of the smart phone – yes, the smart
phone – which has somewhat replaced the car both as a status symbol and as a
way to stay connected to the outside world.
At the same time, the connectivity of those same smart phones has
symbiotically energized a sharing culture which relies on technology.
When it comes to housing, however, the sharing economy has
had a lot more to do with The Great Recession and steep student loan bills than
technology. According to Harvard’s Joint
Center for Housing Studies, between 2006 and 2011 the homeownership rate among
adults under 35 fell by 12 percent, and another two million had boomeranged to
live back with their parents. A report
from the New York Federal Reserve showed that just 9 percent of those aged 29
to 34 were approved for a first-time mortgage from 2009 through 2011. Nonetheless, a recent FannieMae survey reported
that 90 percent of Millennials still aspire to owning a home someday even as
they contend now with low savings, low pay and tighter lending standards.
So, over the next decade, as a group of people of over 35
million begin to form households, where will they live? According to a 2007 survey, 43 percent of
Milliennials would prefer a close-in suburb where both the need for cars and
the size of homes can be smaller as a trade-off for proximity to reliable public
transit, shopping and entertainment options.
One great example of this would be the redeveloped Culver City, CA,
which, besides being the home of Sony Pictures, has become a trendy spot for
restaurants and bars, and will now be more accessible with the recent opening
of Phase I of the light rail Expo Line (which promises to whisk riders to
downtown Los Angeles in less than 30 minutes).
Places like Culver City offer up what’s called “urban
light,” which blends the best of suburban attributes like good schools and safe
streets with the efficiency of smaller residences connected to a town center
with a transit stop.
Although there will
still be great opportunities for builders and developers, they will have to
continue evolving along with their customers.
This will likely mean fewer suburban tract houses in favor of
well-designed flats, semi-private townhomes and small homes which preserve the
functionality of single-family living in a denser environment.
It will mean more households opting to rent
than buy – at least in the short to medium run.
Nonetheless, on a larger scale, this gradual shift to
higher-density living could have profound impacts on the entire economy,
chiefly productivity.
For example,
research has reportedly shown that doubling a community’s population can
increase economic output by 6 to 28 percent, and that half of the variation in
per-worker output between states can be largely explained by density.
Moreover, by spending less on housing and
cars, consumers will have more money left over to save or spend on education,
thereby making them more nimble for a global and largely knowledge-based
economy.
This industry could thus have
an outsized impact on the future:
by
deliberately encouraging Millennials to live closer together and share their
ideas (as well as their cars and extra rooms), America could regain its
economic strength for generations to come.