Since Spring 2021, we have been looking at how the millennial generation has been caught in a cluster of circumstances that has prevented over 50 percent of them from becoming homeowners. Our multi-part report, Millennials and Home Ownership, a Distant Dream for Most, lays out the challenges U.S. millennials have been up against financially, and documents their attitudes toward home purchase aspirations. We looked at a number of factors affecting this group and have been analyzing response data as it relates to three distinct age ranges within the generation—Junior Millennials age 25 to 30, Mid-age Millennials age 30 to 35, and Mature Millennials age 35 to 40.
Here, I’ll share some of our findings on the effect of Covid-19 on this generation’s efforts to get onto the housing ladder. Our survey was conducted a year after the pandemic hit globally. The sentiments we captured are likely to be reinforced by the spread of variants, setting the tone for generational attitudes for some time to come.
About one-third of survey respondents said the pandemic set back their home buying plans by four years or more; over one in ten completely abandoned their home owning plans due to the pandemic. Nearly half of millennials (47 percent) we surveyed were negatively affected by Covid.
Our data shows that Covid has shifted perceptions among millennials about where they could live. Seven out of 10 (68 percent) of millennials we surveyed agreed that Covid had some degree of impact, from minor to very strong, on their thinking about geographic possibilities. Affordability is driving the vast majority of these attitudes and decisions. When we conducted the research, a quarter of the millennials we surveyed were living with family or friends while trying to get back on their feet. Here’s one verbatim comment from a millennial respondent:
“… I had no plans of moving, but lost my job at the beginning of the pandemic. I was unable to pay rent for all of 2020, resulting in a ‘pay or quit’ notice. Although I had some protection under Covid relief laws, I felt pressured to move. Simultaneously, I was able to get a well-paying full-time job. After looking at my options, I realized that if I moved in with my parents (who wouldn’t charge me rent), I could pay off my debts and save up for a down payment. I plan to buy a house within the next year, moving closer to family.”
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Many millennials we surveyed were sufficiently disheartened by pandemic-driven housing scarcity that they completely abandoned the idea of home ownership—our general figure of 12 percent across all groups of millennials was more than twice as high (27 percent) when applied only to those living in suburban areas. Those who were already saving toward a down payment were less likely to abandon their home ownership plans, but nonetheless the majority of those who had already been saving said Covid delayed their plans.
Covid Has made Cities Even Harder to Afford
While 68 percent of the millennials we surveyed said that Covid had some impact on where they thought they could live, one in five were strongly influenced by the pandemic to rethink their location. With companies delaying their back-to-office dates and the rising fear and uncertainty around, now, the Omicron variant, it’s likely these numbers will increase. For millennials living in large cities, the pandemic had the strongest impact on these perceptions—about 28 percent of them reported being ready to reconsider their current location. Our research shows that half of millennials overall would like to move to somewhere different than they’re now living; among the Junior Millennials (youngest), 26 percent said they were strongly or very strongly influenced by the pandemic to re-evaluate their location. Here’s one particularly poignant comment:
“We live in a ruined economy and take jobs which we tolerate for the dignity of a paycheck. Houses in my area (and the taxes therein) are astronomical. So the choice seems to be a) stay near everything I love and be driven to the poorhouse or b) move away.”
Many of those looking to move have accepted the idea of relocating to a smaller, more affordable place, but a quarter of respondents—driven largely by Junior Millennials chasing high-paying jobs in big cities—hold on to the dream of moving to a bigger city. Among those wanting to get out of big cities, expectant parents and millennials who were already saving for a down payment on a home were at the forefront of migration to smaller places. Generally, those who hadn’t started saving to buy a home before the pandemic want to live in bigger cities.
Did Covid Catalyze Change, or Merely Fan Existing Conditions?
Our research suggests that, despite the gravity and high social impact of Covid, the pandemic seems to have resulted in aggravating pre-existing housing trends, rather than generating new ones. Many millennials commented that the pandemic was just one more obstacle in the way of their home purchasing dreams, for example:
“Our generation has had many setbacks to home ownership between the stock market crash and the pandemic, student loan crisis, the cost of living going up much faster than the rate of salary increases… it has been extremely difficult to even be in a position to save money.”
Given that property ownership is the fundamental way most people build wealth, this research has opened our eyes to the apparent intractability of U.S. millennials’ financial situation. With chronic and ongoing issues such as record high student debt and medical debt, wage stagnation that has persisted for decades and is only just starting to ease up – add to that unforeseeable crises like the pandemic – all this weighs on their ability to make the game changing move into property ownership. In the next few articles, we will continue to explore these themes and suggest some possible solutions.