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Millennials seem to be the scapegoat these days for everything that’s changing in business and the economy. But the fact is, millennials aren’t breaking the old ways… at least, not on purpose.
Plain and simply, cash-strapped millennials are broke!
In this article, we’re going to debunk some of rhetoric that is placing the blame on millennials for declines in a number of areas including, vehicle and home purchases, food choices and more.
Millennials are having a harder time finding employment, as well as finding employment that pays well. This is why many still live at home into their 20s and 30s.
And with lower incomes, it only follows that millennials can’t afford new homes, cars or motorcycles.
While some would have you believe that a decline in home sales stems from the fact that millennials aren’t interested in buying homes, facts show that it is the cost of homes that is preventing millennials from purchasing them. The issue is not one of desire, it’s all about income and affordability.
To qualify someone for a home purchase, most lenders look for a ratio of debt-to-income of about 36 percent or less.
So here’s the big problem for millennials in buying a home: The typical sales price of an existing single-family home in 2017 was about 4.2 times higher than the median household income. And compared to what prices were in the late 1980s, it’s 30 percent higher.
The most drastic example of this is in San Francisco, where home prices have doubled in the past five years to reach a median of $1.6 million.
Since the late 1980s, prices have also doubled in Seattle, Miami and Denver in many other urban areas. And while prices are lower in rural areas – the jobs aren’t there.
Fewer younger people are purchasing new vehicles. The previous statement depends on how you split hairs, because it’s both true and untrue. It’s only true because Americans over 55 years of age buy the most vehicles now – making up about two-thirds of all new vehicle purchases. A little over twenty years ago, 55-year-olds only bought about one-third of all new cars. Thus, fewer young people are buying new vehicles because more older people are. That’s not exactly proof of anything.
And while many young people see services such as Uber as better alternative to the cost of owning and maintaining a vehicle, it isn’t leading to a purchase decline.
A recent study by economists found that there was “no evidence that millennials have preferences for vehicle purchases that are lower than those of earlier generations.”
Again, it’s all about affordability and price. And it’s not just millennials who are spending less on transportation – it’s everyone. Vehicles are made better today and tend to last a little longer, and thus, people are holding on to their vehicles longer.
Changes in food preferences are being blamed on millennials, but tastes are actually changing across the board. Millennials certainly aren’t the only generation that has grown weary of canned tuna and American cheese.
The cold hard fact is that because millennials are so cash-strapped, many have no other choice than to prepare meals at home rather than dining out.
Even when they do go to restaurants, they choose the quick eat and run type places, especially those establishments where they may not be required to leave a tip. It’s all about limited budgets.
