The Atlantic- when assets are liabilities, access trumps ownership. A new generational paradigm
Why aren’t young people buying cars and houses? Is it just the terrible economy, or are we seeing the beginning of a more fundamental shift toward public transit, car-sharing, and denser living, with longer-lasting consequences for businesses and families? That’s the question Jordan Weissmann and I asked in our business column in this month’s magazine.
Read the column here. Join the debate here: “Why Aren’t Twentysomethings Buying Cars or Houses?” Read our most angry and articulate critics here. Read our most assenting commenters extoll “the freedom of not owning” here. And here are the best anecdotes and reflections across our hundreds of comments. The responses are all between lower-20s and mid-30s, skew upper-middle-class and coastal, but we do have some good reminders that in more sprawled urban layouts (especially throughout the South) having a car is practically a pre-req for getting to work.
‘So many questions, so many uncertainties in this economy’
25 year old engineer here, and sorry for the long post, but you said share…
I drive a beater because though my credit is good enough to get a new car, I can’t afford one cash, and I have other debt, mainly from college, and living on credit cards in college, that I’m trying to get rid of first. At least the credit card part. Come on, no one learns perfect responsibility at 18. But we will always be a two car home, as long as cars still go fast. We both love driving, and have no desire to live in LA, NYC, Chicago, you get the picture.
I don’t own a home because the job market is too unstable. I work for a government contractor and will my contract be renewed in a year? Will my husband’s construction dependent job dry up? Will we be able to afford a mortgage? Will we even be living in the same area? Maybe, but Maybe not. We’ve already moved away from family and friends just to be able to put our degrees to use, though we’d have loved to stay near by. Even if we buy a foreclosed home cheap and fix it up, what if we have to move away? Will the market be good enough to sell it? If not, who will take care of it? Do we rent it out? This generation doesn’t care for their own possessions well, let alone things that belong to someone else.
There are so many questions, and so many uncertainties in our lives with the state of this economy. I have learned to live on a budget, coupon, stretch meals, grow some of my own food, say no to things that we’d love to do (things like movies, so many meals eaten out of the home, trips out of town, etc.), and more. If you ask me, I’m going to be this way the rest of my life. Sure, we might add a few more movies or trips, but nothing nearly like what we used to before the economy got bad. And we will only do it if we can afford to, cash, no credit required. I’ve learned to live with what I need, even though it is not always what I want. I’m happier this way, believe it or not.
I’m not sure where everyone else will be in the future, but I know my husband and I have a long term plan to to build a home on a few acres of land, that uses alternative forms of energy and is constructed with superior building materials; have animals and grow plants that to feed ourselves (and our community), and only supplement with a small amount of items as necessary, from the grocery store; raise a couple of children in that home we build, where we teach them to love their (Christian, Muslim, Buddhist, Jewish, Atheist, omnivore, paleo-diet, vegetarian, vegan, freegan, rich, middle class, poor, Caucasian, African-American, Hispanic, Asian, young, old, gay, straight, bisexual, transgendered) neighbor, and teach them the value of community, family, education, charity, and love. Maybe if each generation tries to do a better job of raising the next generation, you know, get involved, be parents, mentors, and teachers, we won’t have to go through any more great recession/depressions, hatred, violence, wars, poverty, suffering. Your reality starts with you.
‘Cities are what I need right now’
I am 31. Officially this makes me the tail end of Gen X. In reality, I feel more like a purgatory between Gen X and the Millennials.
There are some economic and recession reasons why I have not bought a house but the main reasons are largely personal.
I live in one of the most expensive housing markets in the United States and enjoy living in the city. My rent is expensive but in my area a mortgage would probably have similar monthly costs. I would also need to move out of the city in order to buy a condo or house and as single person this would be highly inconvenient and boring.
Cities are what I need right now. It is easy for me to get to work on public transportation (20 to 40 minutes depending on traffic.) My apartment is very centrally located and close to supermarkets, bars, restaurants, movie theatres, concert venues, etc. I can easily walk to a lot of places. Also since I don’t have a family, I don’t need much space. Buying a house would be excessive and take a lot of time to clean.
I do own a car but it is mainly for traveling outside of the city.
On the Ford stuff, I would say that is partially right. I know a lot of people around my age who like and own cars but I rarely hear them fantasize about cars like older guys. Tech being more important as a status symbol is probably right and because I live in a cool city, fixed gear bikes are a status symbol. Being able to take weekend trips is a status symbol. Flex time or being able to work from home is a status symbol (though I like going to an office).
That being said, I have plenty of friends who are my age and proud suburban homeowners and parents. However, most of these people went straight to work after undergrad. I decided to attend law school lateish and graduated at 30. So my friends have about 5-10 years of work experience over me.
Another group of friends is still very nomadic and not sure where they will end up. Many in this cohort are artists and/or academics. Why buy a house if you need to move for a post-doc or fellowship? – Dale Ratner
‘We do not own a home or a car … We use Zipcar and rent’
My Husband and I are both 34 and we do not own a home or a car. We use Zipcar and rent an apartment in NYC mostly because of cost. The social pressure to become a homeowner and have a nice car, has been replaced with the freedom of mobility and being debt free. We have so many friends and relatives barely getting by because they are upside down on their homes, cars, and still paying off student loans. We are lucky to live in a city where public transportation is available(most of the time).
It’s not just about not “understanding what owning a car is about” as much as it is a rejection of an old way of life. We can see with our own eyes, how enslaving debt can be. Some debt (like education) you justify as an investment(although that is being debated now as well with the cost of online education and things like the Khan Academy popping up), but owning a car has never been about that. It’s always been an emotional appeal- to make you FEEL powerful, free and in control of the road and your life. Nothing could be further from the truth. If zipcar, etsy, vrbo, homeshare, are any indication, cost is only one factor in the trends of the popularity of these sites. They make a very real appeal to return to a more communal way of life, where we all share a little, and in return, get to enjoy our lives more without the possibility of going to severe debt and ruining our lives. We have all just witnessed honest, hard working people get decimated by the recession. Major hotel chains are having the same problem as well. Independently owned, boutique hotels are on the rise. People want to have genuine experiences, not just cookie cutter, corporately planned neighborhoods, hotels, restaurants, that have been decided by people who don’t even know them. All in all, owning a car, that depreciates every year, costs a fortune in gas, and sits in your garage more than you drive it, just seems like a wasteful way to spend our hard earned money. We’d rather take a trip every year with that money. Or at least save it for a rainy day. – KCL
‘Not being a homeowner has boded me well’
I’m 30 & graduated from grad school in 2006. Thanks to that good timing I was able to get a loan for a “new” car (in quotes because it was a certified pre-own) & as of this year, that loan is paid off #yay. I live in the Midwest, but in an area that wasn’t as hard hit by the recession as others. I’d love to buy a house but I still think prices are ridiculous – $250K for a 2bedroom townhouse? I think not! Sure I could buy something in a cheaper neighborhood, a single family home vs a townhouse, but rather than make those sacrifices SOLELY so that I can be a homeowner, I’ll just continue to rent & look.
So far, NOT being a homeowner has boded me well in this economy. I was able to make a cross-country move in 2010 because I was mobile. I have friends in my old area who are job-hunting & not finding many opportunities, but aren’t able to be mobile because they are saddled with mortgages & homes/condos they probably won’t be able to sell without taking a loss. – Jubi The Great
THE GENDER DIVIDE IN GENERATION CHEAP
Who are these people not buying houses and cars? Many moons ago, in your thread on home-ownership, I noted that 33 year-old me wished like hell he hadn’t bought. Still true. But since, I have noted quite the pattern in my workplace (dominated by educated, professional women): The young women in their late twenties or early thirties are in a hurry to grow up. They’re buying condos they can afford without thinking about what they want for the future, buying nice cars, etc. I’d say it’s about 50/50; other young, professional women in the office are hanging on desperately to their 10 year old Toyota Carolla’s to avoid having to shell out more cash for a car.
For myself, I wouldn’t be a homeowner if I hadn’t gotten married to a woman who is a little older and was in a different place career-wise, and I wouldn’t have a new car except that I now have kids, and the ol’ two-door coupe doesn’t cut it as a family car, so it was hello, station wagon — er, I mean crossover SUV…
So, I would imagine, the answer to your question is… depends on the demographic, and depends on the stage of life. I would imagine the numbers look different for Millennials who are or will be soon married, and who are on a firm financial footing.– Erik Vanderhoff
STUDENT DEBT + AGEISM = HIGH COST OF OWNING
As a young professional earning money, the reason is not being able to accumulate cash because of : (1) student debt repayment; and (2) huge penalties for being a single young renter in terms of income tax. Older, much richer people with mortgages deductions and child tax credits and capital gains and all the rest pay much lower effective rates than I do (which is 27%-33% when you factor in ridiculous state taxes I pay). Even the student loan deduction is phased out for me at my income. – BLM4L
‘There is a *want* for creature comforts … a house and two cars’
Initially, my reaction to this question is “Where are the twentysomethings living?” About three years ago, I moved from Boston to the Upper Valley of New Hampshire. While living in Boston, I relied upon public transportation to get around and rented apartments due to the sheer cost of owning in an urban area. Among my social circle, this was the norm as most did not need the use of a car or possessed the ability to purchase property. At this point, those who have cars have purchased used vehicles and those who own purchased well outside the “city limits.”
Now that I am in a fairly rural area, the paradigm is flipped. My age group in this area rely on purchasing condos and owning cars (though, still mostly used) due to the simple geographical realities of the area; there are few rentable apartments and public transportation only exists within a small bubble. For my own purposes, I continue to rent if only because of the uncertainty tied to my girlfriend’s job prospects once she graduates from graduate school and due to a large debt burden (I talk about this a lot, huh?).
I think there is a notable *want* among my age group for the creature comforts that were often identified as a house and two cars in the garage. However, with the prospect of crushing student debt, uncertain employment opportunities, and the “false starts” generally attributed to my generation, I feel as though the “creature comforts” now describe things such as high-end tech rather than the old traditions.
A closing anecdote concerning my own personal experiences: I manage a customer service department with a department of 25 people within a growing company. The compensation is enough to afford rent, bills, and other financial obligations (Hello, $3.75 / gal gas), but it doesn’t allow me much room in terms of savings or purchase power for a “big” purchase like a house or a car. As a result, I recently purchased an inexpensive used vehicle and will remain in the same rented condo for the third year in a row. This is the story that is echoed by my friends and those around them… Those lucky enough to have sufficient-paying jobs, at least.
Edit – And this is completely ignoring the major issue with home-ownership in general (in my view)… The sheer, overwhelming cost. If you live in the Northeast, for example, and can only afford to purchase a home for under $200,000, the prospect of owning a home becomes significantly less interesting.
‘In a small Southern city … every household has at least one car’
I’m 34, and I live in a small Southern city. Every 20-30something household that I know has at least one car–it may be a beater, but they have one. We have unreliable public transportation here and the city is spread-out, so not consistently bike- or pedestrian-friendly. If you don’t have a car, you’re going to have a very hard time holding down a job. Homeownership also seems more common among younger people here. It’s still possible to buy a house at a not-insane price, especially if you buy out in the county or are willing to take on a house in less than great shape. Folks–even college-educated, white-collar folks– tend to get married and have kids earlier here, and that definitely contributes to the higher homeownership rates as well. (I knew very few women who weren’t married by 26, including myself.)– SWNC
‘I haven’t lived in one place for more than 4 years’
As a 30 year old, I have yet to buy a house because I haven’t lived in one place for more than 3-4 years. I don’t want to buy until I know we’re settled into a city long-term. That should be in 2 years after my wife finished her medical residency. Our 20′s had job changes, grad school, etc.
I have bought cars – a used one 5 years ago and a new car last year … trying to do my part! –c_h_c
‘I hate paperwork, like being mobile, don’t like working on my property, hate having too much stuff’
I’m 28, am a member of a double income-no kids household and currently live in Manhattan. I have three views on why I didn’t buy a house earlier, don’t own a house now and might not ever own a house.
1. Until about 4 or 5 years ago, the main answer would be lack of money. I’ve always lived in cities and the housing bubble was cresting during my first few years in the workforce. I recall viewing the possibility of buying a house as akin to the possibility of turning into a cat. The advantages and disadvantages didn’t really come into play since it was something that was never going to happen. Then again, I had the mistaken view that it might be smart to be able to put down 20%. Maybe if I had talked to one of those rascally real estate agents/loan officers at the time…
2. I got married two years ago, the housing market crashed and both my wife and I gradually increased our salaries – we can now afford to buy a house. However, the flexibility of renting is extremely appealing to us at this time. We anticipate living in multiple cities over the next 5-10 years and the thought of having to buy/sell, fill out paperwork, wonder what the market is going to do (relevant for a short-term buy) seems daunting . Most importantly, we like being able to dump our problems off on the super when anything breaks around the apartment.
3. In the future, I still don’t see any reason to buy a house (though I might someday lose this argument with my wife). Putting a ton of money into an illiquid asset just seems a bit foolish to me. I’ve seen studies noting that long-term returns on housing are equal or less than the returns on many other options, so there might even be an opportunity cost to buying. Yes, we are “flushing money down the drain” by paying our rent, but we would be flushing similar amounts of money on property taxes, home repairs, home upgrades, condo fees (in some cases). Also, what if the place we have decided to settle in no longer works for us due to job opportunities elsewhere? I suppose we’d just have to hope that people were buying at that time in order to escape. Another thing I’ve noticed in my own apartments and other people’s houses is that if you are in the same place for a while, stuff starts to collect. A nice move every few years is the perfect excuse to purge all the useless things that one accumulates over time.
In short, I hate paperwork, like being mobile, don’t like working on my property, hate having too much stuff and depending on your perspective have been either traumatized or educated as a result of the housing market crash. – njmenton
‘I would be terrified to take on the burden of a car or mortgage’
Well… I’m 27. I graduated from Swarthmore in 2008, planning to go into a Americorps-type service year that didn’t pan out. I had the exhausting experience of trying to find a job in the midst of economic panic. I ended up in this exploitative canvassing job that paid minimum wage, often broke labor law, and involved going door-to-door asking for money in pouring thunderstorms, 100+ degree summer days, and at one point 2 feet of unshoveled snow.
I was lucky enough to get a room in a collective house that cost $250 a month, and even then found myself qualifying for food stamps and sinking deeper into credit card debt. If I hadn’t had help from my parents on health insurance and student loans, I don’t know what I would have done.I’m in a much better place now, working in a nonprofit that does social justice work, but in an urban setting, 30k a year goes pretty fast even foregoing a car and sharing an apartment.
I’d like to say that I live a frugal, car-less life because of my awesome politics, but the truth is that even if I made an extra ten or even twenty grand, I still wouldn’t be able to shake the fear that the economy could bottom out and the job could disappear. Trying to live on minimum wage was so frightening, so demeaning, so… well, so traumatizing, that I would be terrified to take on the burden of car or mortgage payments any time soon for fear of losing everything if something went wrong.
And it’s worth noting that I had a hard time scraping by–not just a hard time finding a great job, but a hard time SURVIVING on my own–even with a college degree, health insurance coverage, and parental support. For all the fear, I knew that, if I ever failed to make ends meet, I could go back home to my parents. I cannot imagine how much worse things must have been (and still are) for folks who didn’t have that kind of safety net–for whom missing the next paycheck meant not the mild humiliation of returning to the nest, but the prospect of hunger or homelessness. – Gwen Snyder
‘A cultural shift … Why buy a house when you can rent, travel, etc?’
I can really only speak for myself, but I think it’s a general cultural shift away from commodification and, at its root, Calvinism. Why buy a house when you can rent, travel, etc? Why buy a car when you can rent, lease, use public transport (major Canadian cities have p good transportation, at least Toronto, Vancouver, and Montreal), share a car, use your parents’ car, etc. I think what’s at issue here is the presumption that buying these big possessions is somehow normal. Times are changing, and I know that I don’t want to be tied down more. I want to be mobile and transient because really, isn’t that all that life is? – Damien Otis
‘Purchasing our dream house … would be signing my soul to the devil’
I’m 33 years old, married, with one daughter. I have a bachelor’s and masters degrees from Ivy League universities. My family lives in a small rented thee bedroom apartment in a tall urban skyscraper. We are a single income family, an exception among our friends. In many ways my family’s dreams seems like a relic of the past. My wife and I dream about living in a house with a front and back yard in a safe and friendly neighborhood where our daughter can run around and ride her bike.
Right now my income is $180k per year, which is not the highest but probably better than most of my friends. My family is fortunate to have some help from our respective families. We save between a half and two thirds of this income. I can easily purchase our dream house if I were open to taking a mortgage.
I am completely convinced, however, that doing so would be signing my soul to the devil, although that’s not entirely fair to the devil since he probably wouldn’t be able to wreak as much damage as they have if he tried. Somehow these institutions have convinced everyone that debt is a shortcut to an easy life that one cannot afford. Whereas the obvious truth is that debt merely inflates one’s expenses over time by adding interest into the mix. But even that wasn’t enough. What happened during the past several years has proven to me that in their inexorable drive for profits, banks are no longer looking for clients or customers, they are looking for suckers. I have my own pet theory of how these institutions have hijacked our democratic systems and perverted them to benefit themselves at the expense of everyone else, but I’ll spare you that tirade. My convictions have simply translated themselves into a simple answer to the question the Atlantic is posing to its readers. I will buy a home one day, I’ll just do it the old fashioned way: save up and buy it in cash. This might seem difficult, but in the longer term its better than spending multiples more paying interest. And I also save myself the risk of being another sucker to the skewed system. I realize I’m fortunate to have this option available to me; as salaries have declined during the past several decades, most people can’t do this even if they wanted to. – Jaded with the System
‘The apparent increasing transience of everything’
I am a 28-year-old professional woman living in a major city, with no house or car (or kids, which I think is related). I suspect that, like many articles talking about “Millennials,” you’re really talking about a certain relatively affluent, educated subset of the general population and not everyone under the age of 30 or thereabouts. Many young people I know who work in the city have a car because they can only afford to live in places (often homes owned by their parents) that aren’t readily accessible to public transit.
Nevertheless, I do have student loans that gobble up my monthly earnings and pay way too much for an apartment because, as other commenters have noted, houses are prohibitively expensive and tie you down to a certain area. I don’t feel less “grown-up” or otherwise inferior to my friends with houses and cars, and I know I feel itchy about eventually buying a house after the crisis a few years back. I certainly wouldn’t buy more house or car than I could afford once I was in that position.
Truthfully, many people my age I know love living and working in a city, despite not having cars or houses–who wants a picket fence when you could have food truck festivals, kickball leagues, concerts, art exhibits, political demonstrations, and most importantly, meaningful employment?
I think a lot of it too is the apparent increasing transience of everything. Seems risky to invest in a house when employers could terminate your position tomorrow. Towns that were prospering for decades are now rusty shells of their former selves. Your phone and computer? Already out-of-date and obsolete in two years. We have been trained as consumers to throw away and upgrade–why would we want to spend our hard-earned, fast-disappearing money and establish a permanent presence somewhere when its value could degrade as quickly as a $5 shirt? – jenpdoh
‘Owning a house is a pain in the *** unless you’re loaded’
I’m in my low 30′s, and my wife is in her 20′s. We’ve concluded that owning a home is a pain in the *** unless you’re actually loaded. And buying a car from a dealer means paying a ridiculous premium that vanishes the moment you drive off the lot. Even for used cars, they don’t even pretend that the price you’ll get from a dealership is pegged to what the car is actually worth.
We don’t live in NYC, where inflated property values would make buying a house insane. We live in a relatively metropolitan area of the South (RDU). We’re both aspiring professionals and have determined that if we rent until we’re able to purchase a home outright (i.e. no mortgage) we will save money – the rent we’re paying in the interim (based on our saving plan time-frame) is far less than the amount of interest/property taxes/house repairs that we would pay over the life of a mortgage, even at the low rates that we might be able to get now.
Same with our cars. We bought reasonably priced used cars from reliable individuals. They got more money from us than they would have from a dealer, and we got the cars for less money than we would have paid to a dealer.
We have investments – we’re not stupid. But we also have a savings/resource accumulation plan that allows us to retire even if every one of our investments tanks (though it is not entirely possible to account for the social implications of such a collapse – the kind that might make 2008 look like a birthday party – having some resources independent of that system can’t be a bad thing).
We just don’t trust the system, at least not enough to depend on it, and that includes the received narrative of buying the most house you can get as soon as the bank will let you, and buying a new car because somehow that is of sufficient worth. I guess if we ever get to the point of being really wealthy, we might buy a new car every few years, out of a sense of duty to replenish the used car market.
The illusion of infinite growth based on accelerating conspicuous consumption has been exposed. Some people responded with Occupy Wall Street. We decided not to give the banks our money except in accounts where they pay us interest for the privilege of holding it. –R_Alexander
‘I grew up in the suburbs – never again’
I am 28 years old, and living in one of the most impossibly expensive real estate markets in North America. Vancouver has many amenities: an impressive public transportation system, an ever-expanding network of bicycle lanes, and no shortage of attractions that are near to my house. It also has an average home price in excess of $750,000. Although I am comfortably employed, the bar for home ownership is set so high that my only path to success is either living hand-to-mouth as I try to wrestle mortgage payments (to say nothing of how many years it would take me to save up a decent-sized down payment), or to move so far outside the city that my daily commute would eat up all of my free time. Also, I grew up in the suburbs – never again.
My lack of home-ownership ambition is a constant source of concern for my father, an immigrant who scraped his whole life in pursuit of home ownership. His ultimate success in acquisition was matched by a constant admonishment to me to “own a piece of property” – a theme that I have learned is common among immigrant parents of real-estate-apathetic children. Watching him struggle for the first twenty years of my life in the pursuit and maintenance of various homes had the opposite effect I imagine he’d hoped it would: it left me with a sharp distaste for spending your life chained to an arrangement of wood, plaster, and cement. The ironic twist ending to his tale is that he now owns a condo whose chief advantage is his ability to abandon it to go traveling whenever he likes.
I cannot speak for the rest of my generation. There are a whole host of reasons why one would choose to abjure the creature comforts of having a place that can truly be called “my house”. Speaking for myself, however, I am still interested in living in the world and enjoying my youth. There is time to be spent and money to be made for decades to come. Should I decide to buy a house, it almost certainly will not be in Vancouver, unless I somehow happen upon a pot of gold somewhere along the line. All that being said, I cannot imagine myself in my twilight years, looking back and regaling friends and family with wild stories of my youthful impulse to fiscal prudence and sound asset management.