The Millennial Generation (Part 1)

This article was published in the Escape Artist Weekly Newsletter on September 19, 2018. If you would like to subscribe to the newsletter, please click here.

The demographic now hitting their first strides on the global scene is the millennial generation, with the first of that group now in their mid-30s. This generation encompasses anyone born between 1982 and 2004, according to Neil Howe and William Strauss, authors of the book Generations: The History of America’s Future, 1584 to 2069. They identify many traits about millennials, and some of these are exceptionally relevant to the global marketplace – even more so now that they are hitting their earning strides and have disposable/investable income. Let’s’ explore who they are this week, and next week we’ll dig into how and where they are traveling and buying globally.   

Culture: Millennials grew up in a world filled with technology, electronics, and social networking. They are the first generation since the Silent Generation that is expected to be less economically successful than their parents. This is one reason millennials dominate the ranks of America’s renters (Pew Research). Many speculate that the recession, greater levels of education, student loan debt, and a tough job market have led millennials to delay the traditional American marital and home-buying trends. “Millennials have elected to trade their 30s for their 20s when it comes to buying a home,” argues Derek Thompson in The Atlantic, 2016.  

The Millennial Generation (Part 1)

Marketing: Marketing practices transitioned from broadcasting to narrowcasting during the millennials’ childhood (Sarah Banet-Weiser), making them the generation that has received the most marketing and advertising attention to date. This attention has shaped them into the most brand-loyal generation of consumers. However, because of this attention, millennials also tend to be skeptical about promotional material of any kind and are more likely to listen to their friends than to be affected by marketing or public relations material.

The Millennial Generation (Part 1)Travel: The United Nations World Tourism Organization (UNWTO) estimated, in 2012, that 20% of all international travelers are millennials. “These young travelers are environmentally-aware and tend to stay longer and interact more closely with the communities they visit than the average tourist,” stated UNWTO Secretary-General Taleb Rifai. Millennials are the fastest-growing age segment of travelers with a spending increase of 20% in just one year (American Express Business Insights). The World Youth Student and Educational Travel Confederation published a study of 34,000 people including findings that millennials favored longer trips (the average length being 58 days), avoided “the traditional sun, sea, and sand holidays,” and stayed in hostels instead of hotels.

The Millennial Generation (Part 1)Work: Studies show millennials have very different values when it comes to their work compared to non-millennials. One such trend is their strong advocacy for work-life balance. Another is their concern with finding more happiness and fulfillment at the office than workers of past generations (Forbes). Between 86%-88% listed a “positive culture” and “finding their work interesting” as an essential component to their dream job (even their willingness to stomach a 15% pay cut to work for an organization “with values like their own”). Increasing job automation, remote work, and other technological advancements have made job-hopping and geographic freedom a much more common occurrence (think graphic designers, online-only publication journalists, or computer programmers).

The Millennial Generation (Part 1)Retirement: Companies offering pensions have fallen from 112,000 in 1985 to 23,000 in 2012. Having grown up, gone to school, and begun the job search/entered the workforce in the recession, millennials are acutely aware of economic uncertainty. Only 6% expect to receive the kinds of Social Security benefits that today’s retirees enjoy, 50% don’t believe there will be any money remaining in the Social Security system, and 39% think these benefits will be significantly reduced (Pew Research Center).

The Millennial Generation (Part 1)Fast Facts:

  • There are 79.8m millennials, making them the largest living generation in the U.S. now.
  • They are the most diverse generation in the U.S., with 42% identifying as races other than “non-Hispanic white.”
  • 20% have at least one immigrant parent.
  • They are the most educated generation in the U.S., with 61% of adult millennials having attended college, compared to 46% of baby boomers.
  • 50% consider themselves politically unaffiliated.
  • 29% consider themselves religiously unaffiliated.

Home Ownership

“One consistent finding for the last four years has been that buyers
36 years and younger hold the largest share of home buyers, at 34
percent.” —National Association of Realtors (2017)

Demographics

  • 49% have at least 1 child.
  • Mostly 2-income families.
  • 93% say they eventually want to buy a home.

The Millennial Generation (Part 1)Debt

  • Debt for millennials most often comes in the form of student loans.
  • 46% of millennial home buyers have student loan debt, compared to 27% of buyers aged 37-51.
  • Median loan balance for millennials is $25,000, compared to $30,000 for buyers aged 37-51.

Other Statistics

  • 34% of home buyers in the U.S. are millennials.
  • 56% of first-time home buyers in the U.S. are millennials.
  • 55% are “enthusiastic about home ownership as an investment.”
  • Millennials want homes over 2,375 sq.ft., on average, compared to 1,879 sq. ft. for baby boomers.
  • 90% of millennials use a real estate agent to facilitate negotiations, contracts, and paperwork (not in the traditional role to find properties).
  • Housing inventory has reached historic lows across the country (a Zillow analysis found 3% fewer homes on the market than there were a year ago).
  • Peak home buying years are between 25-45 years old, meaning even the oldest millennials are just 10 years into a 32-year span for the youngest millennials to finally reach 25 years of age and, in turn, the end of that home buying threshold.
  • Due to competition, they are skipping the starter home.
    • “One of the things that we find is that millennials are looking for affordability, but because it’s such an issue, and competition is so high, and so many of those low-end homes are renting rather than being available for sale, they tend to be skipping starter homes and looking for something larger.” Skylar Olsen, Zillow’s senior managing economist.  
  • Millennials are propelling the “sharing economy” (Uber, BikeShare, etc.)

The Millennial Generation (Part 1)These are some very new and different values and lifestyles from what I am used to as a baby boomer. Foreign,Consumer Resource Guide even, in some cases. But these young adults are the ascendant generation, and if we are to serve their needs, we must understand them. For many of us looking at ownership of rental properties overseas, this group holds incredible potential.   

So, for this week, we’ll end here. If we are looking for ways to serve this demographic as they explore the world, we are wise to know who they are and what they like. Next week, we dig into specifics on travel and property ownership trends overseas. Until then, all the best.

This article was published in the Escape Artist Weekly Newsletter on September 19, 2018. If you would like to subscribe to the newsletter, please click here.