Even though more millennials associate buying a home with the “American Dream” than any other generation, the homeownership rate for Americans under age 35 is near record lows at just 34.7%. In other words, millennials seem to want to buy homes, but various factors have been preventing them in doing so. Waiting until later in life to start families is one commonly-cited aspect of the story, but millennials are also saddled with student debt and low wages, which have prevented from from amassing any significant savings. Despite these factors, the demographic evidence is compelling – and many experts are expecting a shift in millennial buying behavior in the coming years.
What Millennials Want in a Home
As the real estate sector becomes more focused on millennials, the market is keying in on an important question: what do millennials want in a home? Today’s infographic from Northshore Fireplace has an interesting methodology to help us get started in thinking about this question. In late 2016, they commissioned a unique study on 1,000 millennials, representative of all 50 states, in which respondents played a hypothetical game. Each prospective buyer was put in the following situation: they are starting with an average American home (20+ years old, three bedrooms, and two baths), but have a $300,000 budget to choose between 38 hypothetical property upgrades to get them closer to the home of their dreams. Here is how millennials chose to spend those budgets:
The results are fascinating, and provide an interesting lens with which to think of real estate in the coming millennial era:
The three most popular upgrades were also in the lowest cost category: new appliances (75%), large master bedroom (64%), and two-car garage (54%) The least popular upgrade was an above-ground pool (3%) Having solar power and an energy storage system also ranked relatively high at 47% Only 24% respondents cared about upgrading to have more land (1+ acres) Other popular options: luxury kitchen (46%), solid hardwood/stone flooring (45%), and finished basement (41%)
Study Methodology
First, a baseline was established to represent the average American home. In this case, it was 20+ years old, and came with three bedrooms and two baths, a one car garage, an unfinished basement, and old appliances. All this sits on a quarter-acre lot in an average neighborhood, as part of an average school district. The approximate value of this home is $200,000. Respondents were given $300,000 of play money to spend, using a hypothetical menu of 38 upgrades with a combined value of $1,000,000. This was represented on the survey by having 20 points to choose from, with each option costing one to three points (depending on how expensive it is). Northshore Fireplace also rightly noted that real estate is highly subjective – and although in real life these different costs may vary, what is important in this context is how millennials value things within the vacuum of this game.
on Cities become “expensive” due to a variety of factors such as high demand for housing, a concentration of high-paying businesses and industries, and a high standard of living. Additionally, factors such as taxes, transportation costs, and availability of goods and services can also contribute to the overall cost of living in global cities. The infographic above uses data from EIU to rank the world most and least expensive cities to live in. To make the list, the EIU examines 400+ prices for over 200 products and services in 172 cities, surveying a variety of businesses to track price fluctuations over the last year.
Inflation + Strong Currency = Expensive Cities
If you live in a city where many residents find it challenging to put a roof over their heads, food on their plates, and make ends meet, you live in an expensive city. But if this inflation is compounded with a strong national currency, you may live in one of the world’s most expensive cities. Singapore and New York City tied for the first rank amongst the world’s most expensive cities in 2022, pushing Israel’s Tel Aviv from the first place in 2021 to the third place in 2022. Both these cities had high inflation and a strong currency. Surprisingly, this is the Big Apple’s first time atop the ranking. The city with one of the most expensive real estate markets worldwide, Hong Kong ranked fourth in this list, followed by Los Angeles, which moved up from its ninth rank in 2021.
Poor Economies = Cheaper Cities
Asia continues to dominate the list of the world’s least expensive cities, followed by parts of North Africa and the Middle East. Though affordability sounds good at face value, sitting at the bottom of the ranking isn’t necessarily a coveted position. While the cost of living in some of the cities in these nations is low, it comes at the price of a weak currency, poor economy, and, in many cases, political and economic turmoil. The decade-long conflict in Syria weakened the Syrian pound, led to a spiraling inflation and fuel shortages, and further collapsed its economy. It’s no surprise that its capital city of Damascus has maintained its position as the world’s cheapest city. Tripoli and Tehran, the capitals of Libya and Iran, respectively, follow next on this list, reflecting their weakened economies. Meanwhile, seven cities in Asia with the common denominator of high-income inequality and low wages dominate the list of the world’s cheapest cities. These include three Indian cities, Tashkent in Uzbekistan, Almaty in Kazakhstan, Pakistan’s most populous city of Karachi, and Sri Lankan capital–Colombo.
