COMPARING GENERATIONS: TRENDS IN THE REAL ESTATE MARKET AND SUSTAINABLE DEVELOPMENT

A THESIS

Presented to the University Honors Program

California State University, Long Beach

In Partial Fulfillment

of the Requirements for the

University Honors Program Certificate

Chase Seesing

Spring 2017

3

ABSTRACT

BASED ON RECENT TRENDS, ARE GENERATIONAL DIFFERENCES

AFFECTING THE OVERALL REAL ESTATE MARKET AND SUSTAINABLE

DEVELOPMENTS OF TODAY AND THE FUTURE?

Today, four generations coexist, portraying an individual identity categorized by trends,

lifestyles, and habits. Numerous factors are involved in the sorting out the generational

differences, but each seems to be intertwined. The Millennial Generation, classified as being

born between the early 80’s to the end of the century, are currently the largest population in the

United States claiming 75.4 million people, while Generation X and the Baby Boomers continue

to age. Sustainable building or green building, although an older concept, has recently gained

popularity. Those interested in green building have moved away from the “norm” leaving lawns

today are covered with artificial grass or wood chips, and solar paneled roofing, ultimately

reducing home expenses significantly. Because the Millennial Generation is of the age to buy

homes, this study will cover their generational difference between Gen X, and the Baby Boomers

and where and why statistics are trending in their current direction. Home buying is one of, if not

the largest investment an individual can make in America, but not every generation has the same

outlook on the once acclaimed “American privilege”

Keywords: Generation, Sustainable Building, Trends, Buying, Renting

4

TABLE OF CONTENTS

ACKNOWLEDGMENTS………………………………………………………………………...5

LIST OF FIGURES……………………………………………………………………………….6

LIST OF TABLES……………………………………………………………………………..….7

LIST OF ABBREVIATIONS…………………………………………………………...………...8

CHAPTER 1

INTRODUCTION……………………………………………………...............................9

METHODOLGY………………………………………………………………………...10

HYPOTHESIS………………………………………………….………………………..10

CHAPTER 2

LITERATURE REVIEW………………………………………………………………..12

CHAPTER 3

PERSONAL RESEARCH………………………………….……………………………19

STUDY METHODOLOGY……………………………….…………………………….19

FINDINGS………………………………………….……………………………………20

RESULTS………………………………………………………………………………..25

CHAPTER 4

ANALYSIS………………………………………….…………………………………...27

CHAPTER 5

CONCLUSION…………………………………………………………………………..34

CHAPTER 6

REFERENCES…………………………………………………………………………..36

5

ACKNOWLEDGMENTS

Foremost, I would like to thank my thesis advisor Professor Heather Barker. When I first

took honors section in Design, I felt a mental connection as if my work could relate to her past

and future experiences. Without her by my side guiding me in the right direction, this paper lack

a clear vision and passion towards the study. For all these reasons, I thank you for everything

you have done.

I would like to thank the University for providing me all the tools resources to study this

topic. I have enjoyed my time at The Beach, and would recommend it to anyone looking to grow

in all aspects of life in such a short amount of time

Lastly, I would like to thank my mom and dad. Everything I have in life is because of

them and I am truly grateful for the blessings they have continued to bestow upon me. Words

can’t describe the love I have towards my family and friends. The encouragement I receive from

them on a daily basis is undeniable. Thank you

6

LIST OF FIGURES

Figure 1: Question One…………………………………………………………....20 Figure 2: Question Two…………………………………………………………...21 Figure 3: Question Three………………………………………………………….21 Figure 4: Question Four…………………………………………………………...22 Figure 5: Question Five…………………………………………………………...22 Figure 6: Question Six…………………………………………………………….23 Figure 7: Question Seven……………………………………………………........23 Figure 8: Question Eight…………………………………………………………..24 Figure 9: Question Nine…………………………………………………………..24 Figure 10: Question Ten…………………………………………………………..25 Figure 11: Projected population by generation……………………………………27 Figure 12: Homeownership Rate 1990-2015……………………………………...30 Figure 13: Living Tiny………………………………............................................32 Figure 14: Student Loan Debt from 2004 to 2012………………………………...33

7

LIST OF TABLES

TABLE 1: U.S. Homeowners – Number of Renters vs. Owners…………………29 TABLE 2: Tenure by Age of Householder……………………………………….29

8

LIST OF ABBREVIATIONS

ROI Return on Investment

DTI Debt-to-Income

APR Annual Percentage Rate

LEED Leadership in Energy and Environmental Design

RE Real Estate

SFA Single Family Attached

GDP Gross Domestic Product

9

Chapter 1

INTRODUCTION

Today, the bulk of the United States economy is driven by the consumption of goods,

products, and services. Of these goods, products or services, roughly 7% of the countries GDP

are calculated via the consumption of real property or real estate. Although this number seems to

be insignificant, it is a determining factor in the overall well being of the countries economic

standing. Naturally, if the market for home buying and or selling is strong, so will the U.S.

economy. Real Estate today has a different meaning than it did not even 15 years ago to

consumers, and it is important to note every generation co-existing today has had a different

economic and environmental impact on the both the home buying market and individual

consumption of goods. Each generation has assumed an individualized buying persona or

character, which ultimately separates them into their own specific class. Along with researching

the generational differences, this thesis will try to understand the “green movement” in regards to

the standard of living and also purchasing parity of all consumers in today’s market, may it be

real estate or other green goods. Green goods can be classified as any organic good, electric

vehicles that produced less harmful emissions for the environment, or reusable resources, etc.

Sustainable developments, and or green building, are classified as any improvement to property

that “meets the needs of today without compromising the needs of future resources” (Brundtland,

2017). Individuals of all generations have their own opinions on “going green” however, most

humans fear change and ultimately are not interested in investing in the future.

It is important for future consumers to understand the severity of the housing market. As

Millennials come of age to invest in real property, either renting or buying, the prices of living

will continue to increase. Investing in property is exactly that, an investment, but without the

10

available funds, Millennials are said to be “six years behind their time” (Generational

Differences, 2017). Pre-existing debts can and will hinder the future successes of both economic

and environmental standing in the United States.

METHODOLOGY

This paper will aim to answer several different questions

1. Do generational differences actually play a role into how homes today are being

bought, sold and rented, and built?

2. What is the root of the millennial mindset and their shifted attitudes involving the real

estate market?

3. Is there action behind the green movement or is it just an outlandish vision in which

consumers think is the right choice for the future?

4. Is renting property the vision of the millennial generation or is it the only affordable

option due to significant debt both acquired and assumed through a number of

different avenues?

The main objective of this paper is to dive into the generational differences and seek the

root of the changing of times, and understand how as a realtor, the future market can be

manipulated. The Millennial Generation, Generation X or Gen X, and the Baby Boomers will be

studied in both individual case studies conducted by outside sources and also a personal case

study conducted by myself.

HYPOTHESIS

I believe the root of the economic downturn falls right into the laps of the millennial

generation. As a collected bunch, Millennial’s are selfish, risk adverse, and fear financial

insecurity simply because of how and when they were raised. Millennials grew up in an age of

11

economic instability, and believe their objective is to leave the world a better place than they

found it. The Millennial Generation believes attending school and most likely graduate school

will lead to a better paying job, ultimately granting them economic stability at a young age.

Sadly, the Millennials are wrong simply because the Baby Boomer generation still occupies a

bulk of the available jobs. This is thus leaving younger generations over-qualified for the entry

level positions due to their extensive school work, and under qualified for the jobs they believe

they should be given simply because they lack experience and viable connections within the

industry.

Student debt accrued will be the leading hindrance on Millennials ability to buy a home.

Because of the pre-existing generations occupying homes and jobs, Millennials are left to live at

home or continue to pay skyrocketing rents until they can muster enough cash to place a

competitive down payment on a starter home.

12

Chapter 2

LITERATURE REVIEW

Today, multiple generations coexist, but exhibit obvious differences leaving a gap in the

way humans act and interact across generational lines. Humans naturally are molded to their

environment, upbringing, etc., leaving each their individual identity, however, society has a

bigger pull on the generational gap. Both economic and environmental factors are key to the

home buying market, ultimately shifting from generation to generation.

By learning more about the generational differences, severities regarding positive or

negative market trends can possibly be minimalized. For example, if home sellers know the

millennial generation is more prone to buy a home with sustainable elements, or any other

specific criteria, home buying could be changed. As of today, Millennials preoccupy the largest

population regarding size by generation. Naturally, as their population ages, eventually they will

become first time homebuyers. Market trends today however show Millennials are

predominantly renters, while Generation X and the Baby Boomers still maintain a stronghold on

the bulk of real estate properties nationwide.

This literature review will cover the generational differences, ranging from the Millennial

Generation to the Baby Boomers, and how the real estate market has displayed a huge shift in

buying and renting trends regarding sustainable developments. It will go in depth into how

Millennials view sustainable products other than real estate, and its translation to the product

they are able and willing to purchase although price is a factor. Sustainability is the ultimate key

to future generations, and the foundation is created by the current generation. In a way, past

generations have molded the way homes are built and bought for Millennials.

Defining Millennials

13

Although its not a specific date that ends Gen X and commences the Millennial

Generation; most view the beginning of the Millennial era as the first half of the 1980’s and

ranges to about 2004. According to an article titled New Generation, Great Expectations: a Field

Study of the Millennial Generation by Sean Lyons and Linda Schweitzer, Millennial’s are

characterized as self centered and carefree individuals who “want it all, and want it now”(Lyons,

2010). Millennial’s work to spend, to have items, and to be content with personal achievement.

Because this certain generation is “Me” driven, all opportunity for self-gain usually prioritized.

The Millennial Generation is by far the most stereotyped population in the world; however,

always search to break away from the norm or standard of living. The journal by Lyons and

Schweitzer goes on to describe the Millennial Generation as “motivated, social workers”(Lyons,

2010) that have received the highest education of all generations.

The Millennial Generation has been shaped by technology, virtually growing up with

electronic “smart devices”. The instantaneous world in which this generation has grown has

molded their individual identities. Electronic devices seem to distance this generation from their

surroundings, leaving the concentric mass loners. As stated in an article titled Understanding the

Millennial Generation in the Journal of Business Diversity, authors Travis Smith and Tommy

Nichols note that the Millennial’s dependence on technology may eventually “replace them in

the workplace”(Smith, 2010). Technology has also modeled buying trends for the Millennial

Generation. By having the power of the Internet, buyers now have prices at the reach of a

keyboard, phone, tablet, etc. They can shop rates, realtors, investors, and lenders. Never has a

homebuyer had such resources readily available.

Home Buying is risky, a large investment that can shape future assets and liabilities for

families. The Millennial generation as studied by Neil Howe in his article titled Millennial

14

Generation: Keep Calm and Carry On “tend to be risk adverse” (Howe, 2014), meaning they

will try to avoid at all cost issues that can jeopardize their economic standing and overall

wellbeing. Contrary to belief, Howe shares statistics showing Millennials “remained optimistic

following recession; market crashes, and was confident in America’s future” (Howe, 2014).

Millennials are labeled as goal oriented, and the “most educated generation” (Howe, 2014), sadly

leaving them in debt to years of college loans. Millennials value education above all, but debt has

affected their chances of home buying. Also, with an impacted workforce of past generations,

Millennials are finding it difficult to find a steady paying job in which they are properly qualified

but also tend to be over qualified for other, lesser positions.

The main generational difference between Millennials and both Generation X and the

Baby Boomers is their interpersonal understanding of economic diversity. According to Dr.

Patricia Buckley, in her article titled A New Understand of Millennials: Generational Differences

Reexamined, Millennials are “numerous, diverse, highly educated, and drowning in student loan

debt.” Millennials experienced first hand the real estate market crash of 2008. Personally being a

Millennial who saw the economic downturn in the beginning of the century, I grew worrisome of

my own personal economic instability, and rue the idea of being tied to a fixed mortgage for 30

plus years. Millennials view home loans today as “a ticking time bomb” (Buckley, 2015) and

worry if their dollar will matter in the future.

Because students are sinking in loans and student debt among other accrued expenses,

Millennials lack the ability to live comfortably without constantly worrying about how to afford

their daily life styles. In todays America, the cost of living far exceeds minimum wage paying

jobs. Students attending school for the piece of paper that tells employers they are viable

candidates only have time to work jobs paying a less than a practical wage.

15

Naturally, because the Baby Boomer Generation was a significant size, following

generations will grow the general population exponentially. Neil Howe continues to write in his

article titled The Millennial Generation, ”Keep Calm and Carry On”, the Millennial Generation

“compromises roughly 100 million people mostly in their teens and 20’s”(Howe, 2014).

Because the first Millennial graduated from high school in 2000, college in 2004 and received

their masters in 2006, “their view of the general world economy is straightforward” (Howe,

2014). Because the size of the Millennial Generation is so large, naturally they preoccupy the

largest amount of homebuyers “accounting for 35 percent” according to the National Association

of Realtors (2016).

Other Generations and Their Outlook

Generation X, otherwise referred to as Gen X, followed the world’s largest generation

known as the Baby Boomers and was parent generation to Millennial’s. Gen Xers are “those

born between 1965 to 1978” according to an article by Kleber and Associates titled Lingering

Myths about Generations. Due to the Baby Boomers outrageous size, Generation X had to adapt

to a different lifestyle than their parent generation. Those born between 1965 and 1978 sought

home buying as a perfect investment and were “living independently at the age of 25” (Kleber,

2005). Gen X was “extremely motivated by home equity”(Kleber, 2005), and viewed home

ownership as the American dream granting them power and independence.

Unlike the broken millennial generation, both Generation X and Baby Boomes relied on

joint families to afford living. According to a case study done by Neil Howe, in his chart titled

Generational Difference Chart, Gen Xers were the first generation to “rely on a woman to

provide financially” (Howe, 2014). Because Generation X was adept to adversity and change,

home buying wasn’t as large of an issue than it was to the Millennials or Baby Boomers.

16

Currently, Generation X populates the majority of the workforce leaving Millennials only 10%

as compared to the 40% occupied by Gen X. This is another factor into why Millennials cannot

afford a home while Gen X can.

Generation X, being “latchkey kids” (Howe, 2014) grew up independently. They were

the first generation in which both parents, mom and dad worked, leaving the children to go to

school, and be home alone for most of the rest of the day. This ended up shaping Generation X’s

outlook on life significantly. As the role of the American women in the work force increased, so

did other questions of equality. This was a time of great question and great wonder. Generation

X passed on this lifestyle to their offspring.

Green Development

As the economy has shifted, so has the development of new properties, business

buildings, etc. Developers have continued to advance “green building” or “sustainable

development” techniques and practices. According to an article by Renata Schneiderova

Heralova titled Sustainable Buildings: Market Value and Market Share, sustainable development

is defined as a “development that meets the needs of the present without compromising the

ability of future generations to meet their own needs”(Heralova, 2011). Although this is a broad

definition of sustainable building, it shares the developments built today are being built for

tomorrow’s generation. Heralova later goes on to say in her article that the “main objectives of

sustainable development are to avoid resource depletion of energy, water, and raw materials,

prevent environmental degradation caused by facilities and infrastructure throughout their life

cycle, and create built environments that are livable, comfortable, safe, and productive”

(Herlova, 2011). As the earth continues to age, so do the outstanding resources we as humans

have readily available. Sustaining the environment can prolong, and even reproduce so resources

17

mandatory for living.

Examples of green building techniques would be to use solar paneling, LED light bulbs

that consume significantly less energy than a standard light bulb, reusable water known as grey

water to farm agriculture, paints that are environmentally safe, reused resources in drywall, wood

frame, and structure of home, or business buildings. It is important to add that the green

movement is far beyond reusable energy within the home. Sustainable development is “linked to

both environmental crisis and poverty” according to a book by W.M. Adams titled Green

Development. New buildings are predominantly being constructed on reused resources.

Millennials are a group of buyers who work to spend, and are willing to go above for an

organic cup of coffee. My future studies will look into the overall population and their spending

habits in regards to what they are purchasing and for what premium price. In some studies,

Generation X has shown they are not willing to pay a premium for “organic” green goods. Up-

brings may play a role in this finding, however there is a much deeper connection in my opinion.

Millennials View of “Green”

Acknowledging the fact sustainability is better for the future and actually purchasing greener

products are usually skewed when it comes to the consumer. Bendix Anderson, writer of Are

Apartment Renters Willing to Pay More for Green Features, shares that new apartment buildings

are all being built with green features. Building codes have evolved, “requiring new apartments

to be much more energy efficient that older construction” (Anderson, 2016). In a survey

conducted by the National Board of Realtors, statistics share that those who are renting primarily

are “willing to pay an extra 32.64 a month to live in a building that has a green certification”

(Anderson, 2016). Millennials find are very adept to “brand awareness” and are considered the

most “care-full global consumers” according to an article titled Green Generation by the Nielson

18

Global Survey.

LEED certification was also important to those who were studied. LEED or Leadership in

Energy and Environmental Design was quoted as “being a priority to 75%, being ranked strongly

interested” (Anderson, 2016). It can also be said that those living in older, no converted “green

buildings” are more price sensitive, simply meaning although they may be able to afford an extra

50 dollars of rent to cover the green utilities, they would rather spend their “hard earned money”

in other places. It is difficult to view the Millennials Generations overall view of “green”, but

small statistical data sets shows those facing the option of one or another choose sustainable

development.

Method

To answer my proposed research question, I am going to need to analyze first time

homebuyers, past, current, and future market trends, and also the overall demand of sustainable

goods as compared to sustainable development. As a realtor, I can survey those who walk

through open house hosted by myself personally, and ask current age, marital status, and

academic standing. By polling the general masses, I can grasp a better understanding of what the

people want and look for in homes. I will skew home pries, neighborhoods, and demographics,

leaving no outliers or random variables unvisited. Data gathered will be compared and contrasted

mainly by generation.

19

Chapter 3

PERSONAL RESEARCH

For the purpose of additional information, I conducted a personal survey to see exactly

how my peer Millennials felt towards the home buying market. The sources I used for a majority

of this thesis proved to be viable, however, I wanted to understand the thinking of my closest

family and friends. This case wasn’t conducted to argue current beliefs and or facts, however to

strengthen my argument by adding additional resources to see if my predicted hypothesis would

hold strong. For the study, I posted a link on my Facebook page, and also emailed a link to a few

of my closest friends who I knew to be of the millennial generation. There were no specific

guidelines other than filling out the survey to the fullest, answering truthfully and honestly.

Gender did not play a role in this survey, and all individuals completing the survey were of legal

age.

STUDY METHODOLOGY

For the study I composed ten questions, mainly aimed at the millennial generation

My 10 questions were as followed:

1. What is your age?

2. Are you currently living at home with your parents or guardian?

3. Are you currently renting or leasing a home?

4. Is owning a home important to you?

5. Do you currently own a home of your own?

6. Is the “green movement” important to you? (Less emissions, electric vehicles, eating

organic foods, and re-using specific resources?

20

7. Are sustainable features, such as solar panels and reusable energies, a necessity in your

future home?

8. Would you rather own a home or rent a home in the next 5 years?

9. Would you rather own a home or rent a home in the next 10 years?

10. Do you have pre-existing loans?

FINDINGS

For the sake of the survey, I will post my findings, and analyze the significance and or

failed findings. The survey was open for 3 days for individuals to be able to respond before it

was closed. 43 random individuals participated, and I am unaware of the number overall males

and females within this case study.

1. Individuals participating in the study ranged in age from 18-20 to 26 or older. I chose

this age range to show the spread of thinking via age across the millennial generation.

Figure 1: Question One

21

2. Of the 43 individuals who responded to the case, one skipped this question, most likely

on accident. About two-thirds of the respondents are no longer living at home, however the one-

third that still is significantly outweighs previous generations at this time of the study.

Millennials are staying at home for as long as possible, saving money anyway they can

Figure 2: Question Two

3. To no surprise, almost half of the Millennials are renting and or living with their

parents still. Of the 43 respondents, about 47% are currently renting and or leasing a home.

Figure 3: Question Three

22

4. Owning a home previously was the American dream, and to the majority of the

majority of the Millennials surveyed still agrees with this fact. Almost all believe owning a home

is important.

Figure 4: Question Four

5. Of the polled 43 individuals, almost all minus a few are not currently homeowners,

following the metric that Millennials are six years behind the times

Figure 5: Question Five

23

6. This question played as a table-setter to my follow up question. I found that

Millennials do care greatly about “going green’ and protecting the environment, however only at

a fixed cost.

Figure 6: Question Six

7. Going green is the “right choice” however when it comes down to the cost for the

future, selfish Millennials are not as nearly as interested in investing for those of tomorrow.

Figure 7: Question Seven

24

8. Because the surveyed respondents are still of a young age, financially in five years,

owning a home seems outlandish and almost near impossible. Sure it is ok for them to dream,

however a down payment for a home is hard to uncover in a short amount of time.

Figure 8: Question Eight

9. However, 10 years from today is a far different story. The youngest polled individual

will be in beginning their thirties, and as the graph shows, most Millennials still dream of home

owning.

Figure 9: Question Nine

25

10. Loans play a significant role in the future of real estate. I believe those with

outstanding loans will deter from home owning simply because of the lack of affordability.

Figure 10: Question Ten

RESULTS

The results are clear and concise. Millennials, at least those in my study are mainly

renting and or living at home still today. Almost half of them have loans, most likely pre-existing

student loans, which ultimately affect their attitudes towards further spending. It is interesting to

find the polar differences in buyer intentions over the next five to ten years. It is possible those

who are currently living at home believe the next step is to rent, however is jumping from living

at home with your parents or guardians straight into home owning really a plausible option? The

obvious answer would be yes, but the Millennial mindset is unlike any of the previous

generations. It is also interesting to note Millennials view towards sustainability in the home.

Yes, we may all admit going green is the right choice, but when Millennials are faced with

“unneeded” or “unwanted” costs, sustainability goes out the window. The global warming

phenomenon is sweeping the nation, but when it comes down to relative cost, how much are

26

Americans willing to pay for these clean features?

If I were to redo or enhance this study in anyway, I would specifically ask those who

chose to rent over home owning what their thought process was, and also expand on if the pre-

existing loans were impacting the standards of living. By looking into the minds of my closest

friends, I received a better understanding of the “Millennial Mindset”. I would also like to

expand this study to different generations and view their attitudes towards sustainability. Do they

think going green is the vision of the future, or a brand that marketers use to sells consumer

goods. Also, it would be interesting to note how the different generations would be able to afford

such a dramatic down payment for a new home.

I was shocked to find the volume of students living at home wasn’t higher than the

statistics show. I believed that Millennials are a freeloading generation, who enjoy hand out and

free meals. I am unsure of the particular upbringings of the respondents, and it is possible these

selected individuals moved away from home to attend college. Also, I was surprised to find the

number of respondents with pre-existing student loans. I believed the number would be far

greater than that polled.

The selfish, me first generation needs to take a good look into the mirror and understand

they are a part of something much bigger then themselves. Cost aside, sustainability is a dying

brand, but needs to be re-energized and the Millennials are the right generation to do so.

27

Chapter 4

ANALYSIS

Every generation is shaped by their upbringing, view of the world, and their peers. The

mindset of every generation can and does change the economic standing of the country.

Previously, Baby Boomers were by far the world’s largest generation by number, and because of

this statistic, Baby Boomers are still dominating the work force. As shared by Richard Fry in his

article titled Millennials Overtake Baby Boomers as America’s Largest Generation, “Baby

Boomer are currently only 52-70 years old” leaving them in their prime working years still.

Older generations would retire at a much younger age, but because Baby Boomers “live to

work”, the jobs in which are supposed to be vacant due to a significant number of retirees, aren’t.

This overpopulation of workers still currently in the workforce effects every succeeding

generation. Both Generation X and Millennial individuals are being under-paid for jobs they are

over-qualified for.

Figure 11: Projected population by generation

28

As stated beforehand in the literature review, the millennial generation is currently the

largest living population. As the number of living Americans continues to grow, displacement of

jobs, and living conditions will also be shifted. America today is a nation of immigrants. Richard

Fry goes on to say in his article that because of the steady incoming number of immigrants, the

Millennial generation will be “the largest population to ever exist” (Fry, 2016) in regards to

overall number of individuals.

Many view generation X as a transitional generation, whereas they link their independent

upbringing to both the “me” first world Millennials live in today and the hard working Baby

Boomer generation who believed working was a means to living an enjoyable and comfortable

life. According to William Schroer in his article titled Generations X, Y, and Z, Among Others,

Gen X individuals were known as the “lost generation, faced with high divorced rates.” Most

grew up in the home alone, ultimately shaping their personas into which they are today. These

generational differences can be seen in the way they molded their own children, the most selfish

generation to date. Millennials believe everything should and will be handed to them.

Because of all the generational differences existing today, the home market has

significantly shifted. Renting today is the choice of living for the Millennial generation, may it

be more affordable for some, or a way to constantly stay mobile for others. Countrywide, a little

more than about “one-third of the population”, regardless of age bracket is renting according to

the National Multifamily Housing Council. The first table on the next page shows United States

households, regarding the overall number of renter’s versus homeowners. The second table on

the succeeding page shows the age breakdown of renters to homeowners in the United States.

29

Table 1: U.S. Households - Number of Renters vs. Owners

Table 2: Tenure by Age of Householder

30

It is important to note the ratio of homes rented to homes owned by those under the age

of 30. By looing at these two tables, we can infer that rental property is the “affordable”

alternative, which almost all Millennials are seeking. Although mortgage rates today are almost

identical to rental rates in cities such as San Francisco, New York, and Long Beach, the next

generation lacks available funds to place for a viable down payment. Their DTI or Debt-to-

Income ratio is in the negative. Millennials need to constantly work, and live paycheck to

paycheck sadly, to be able to afford rent in such cities. Even previous generations are joining the

rental movement. The cost of living in most major cities has hit an all time high. Unfortunately,

those who own rental property understand the shift in real estate and have dramatically raised

prices countrywide. Because homeownership has hit an all time low since the mid 90’s,

Millennials are pioneers in the mobility movement.

Figure 12: Homeownership Rate 1990-2015

31

Millennials view home owning as burden on their social, economic, and environmental

well-being. The choice to rent is partly determined by annual income, and also the negative

attitudes towards being strapped to a 30 year fixed mortgage in a SFA or single-family residence.

Also it is important to note marriage rates are at an all time low and divorce rates have continued

to spike. Couples who lack joint incomes have a significantly harder time to afford mortgages

apart with paying off other debts, i.e. student loans and other borrowed monies. According to

Lisa Prevost of The New York Times in her article Renters are Staying Put, in 2014 only “14.2%

of those ending their lease did so to buy a home”. This number has not moved since 2010, where

at the highest percentage was around 14.7%. There is affordable housing in the southwest or

Midwest, however Millennials feel the need to “be in large social hubs” (Prevost, 2016). It can

also be argued, Millennials are overwhelmed with other aspects of life and are under informed on

the real estate market.

Sustainability has many different avenues. Individuals don’t necessarily have to have

reused water, an organic garden in the backyard, which produce all fruits and vegetables

consumed by the family, and solar panels on the roof to be considered green. As shared in the

Literature Review, LEED has been progressing into the future of commercial buildings and also

residential homes. Millennials today are also shifting towards the miniature home movement.

Basically, miniature homes are exactly that, miniature. This avenue of sustainability decreases

the amount of resources consumed, while also decreasing overall costs of living. It is an

affordable escape for those individuals living paycheck who wish to own a home of their own,

while also being mobile. Mini homes according to an article titled The Tiny Life, “addresses

issues faced by all Millennials living paycheck to paycheck today, while being green

alternative.”

32

Sustainability does matter to the average consumer, but the way individuals live

sustainably is different generation to generation. Millennials have been exposed to the

environmental hazards since conception basically. In the article titled Does Sustainability Matter

to Consumers, author Ravi Dahr shares that of course sustainability is important to all, the cost of

sustainability is a hindrance on their decisions to go green. Costs are “less salient to those

individuals when it is far in the future, like climate change” (Dahr, 2016). Millennials do have

environmental awareness however are less susceptible to pay for others where it doesn’t

necessarily concern their well being. As seen in my individual case study, Millennials do feel

going green is important in consumer goods, but sustainability within the home is not imperative.

This is so solely because of cost. Who wouldn’t want to live a cleaner life, produce less harmful

emissions? The answer is no one, but logically this comes with a hefty upfront price tag.

Student debt is sweeping the nation and hitting the millennial generation the hardest.

According to Jennifer Wang in an article artfully titled Millennials and Student Debt, we learn

there are currently “1.42 trillion dollars worth of student debt in America”, and this number

effects “45 million college graduates” across the country. Because of this economic impact,

Millennials are “underwhelmed by their jobs”(Wang, 2015), and cannot afford the basic

Figure 13: Living Tiny

33

necessities of living. Today, “every college graduate in 2016 will assume $37,152 of college

debt” (Wang, 2016) regardless if they took out student loans or not. Sadly, because student loans

are so steep, it takes on average 25 years for the normal college grad to pay off their loans. If

students didn’t have loans this significant, they could spend those 25 to 30 years paying off a

fixed mortgage. These statistics don’t count for graduate students seeking additional school may

it be their masters or doctorate diploma.

Figure 14: Student Loan Debt from 2000-2012

Figure 13 shows the steady increase in average student loans since the beginning of the

century. In 2012, the average loan debt of a college graduate was nearly that of only 10 years

prior.

34

Chapter 5

CONCLUSIONS

Millennials drew the short end of the generation stick. They inherited a poor economic

standing, and it doesn’t appear to be making progress anytime soon. The decision to rent is partly

financial, partly dependent on their generational attitude. For sustainability, the future of the

planet seems to be in limbo. Decisions to place solar panels on the roofs of your single-family

residence wont lower green house emissions significantly, but it is a start. Until students learn to

manage their financial instabilities, the housing market will continue to wither.

Through the course of this thesis, I learned a couple things. One, Millennials are as

selfish as all generations view them to be, and owning a home can be a hindrance on the means

of living. Today, jobs take individuals all over the country, or world. With the amount of stress

placed on living a comfortable life, surrounded with financial security, taking a promotion out of

state is mandatory. Millennials do not want to be tied down to one specific location, and student

loans are a factor killing the American Dream.

School today basically is a means to live. One piece of paper theoretically makes one

better than the next. Unfortunately for the Millennial generation today, everyone basically has a

college degree, thus some individuals are seeking to obtain their masters. More school yields

more money, theoretically of course, but also costs more money to the average consumer. This

aspect of continued learning isn’t necessarily tied to one specific generation. As individuals of all

ages become more competitive within both the job market, schooling with become that much

more valuable.

For the foreseeable future, renters will continue to dominate the housing market. Until the

price of living and or home prices decrease, Millennials and the generations to come will be

35

unable to purchase a home. Like throwing money into a burning fire, renting is not an

investment, but a loss. Mobility however is what renters are paying for. If they choose to live a

sustainable life, renters can do so, and have no financial ties to the property for longer than the

given lease term. Ultimately the argument to what is the right choice for the future of real estate

comes from each individuals opinion. It doesn’t matter how one chooses to live, however it must

be noted that living and debt will continue to grow, and these factors cannot be diminished.

I enjoyed this thesis, for the topic is relatable to my current field of work. Personally as a

Millennial, I do want to own a home, but sustainability isn’t as important to me as most believe.

Not all have the luxury of graduating from a four-year university free of debt, but I am. This

semester is my final semester at Long Beach State, and with the money I have saved over the

course of my short life, I will be able to afford a down payment on a home in the next four to

five years. I believe renting is a waste of money, and my parents say they will enjoy my

company living at home with them as long as I need. My parents promote living the life I want,

and have supported me and will continue to support me through the entire process.

36

CHAPTER 6

REFERENCES

Adams, W.M. "Green Development: Environment and Sustainability in the Third World."

Trends in Ecology & Evolution 5.11 (1990): 384. Web

Anderson, B. (2016). Are apartment renters willing to pay more for green features? National

Real Estate Investor, , n/a.

Brundtland. "Topic." International Institute for Sustainable Development. N.p., n.d. Web. 21

Apr. 2017.

Dahr, Ravi. "Does Sustainability Matter to Consumers?" Yale School of Management. N.p., 20

Sept. 2016. Web. 21 Apr. 2017

Doherty, P. C., & Leinberger, C. B. (2010). The next real estate boom. Washington Monthly,

42(11), 20-25.

Fry, Richard. "Millennials Overtake Baby Boomers as America’s Largest Generation." Pew

Research Center. N.p., 25 Apr. 2016. Web. 21 Apr. 2017

"Generational Differences." SpringerReference (n.d.): p. 1-4 West Midland Family Center. Web.

3 Mar. 2017

Heralova, R. S. (2011). Sustainable buildings: Market value and market share. Organization,

Technology & Management in Construction, 3(1), n/a.

"Home Buyer and Seller Generational Trends." Realtor.org. N.p., 09 Mar. 2016. Web. 16 Nov.

2016.

Howe, Neil. "The Millennial Generation, Keep Calm and Carry On." Forbes. Forbes Magazine,

4 Sept. 2014. Web. 16 Nov. 2016.

Mnasri, A. (2015). Renting vs buying a home: A matter of wealth accumulation or of geographic

37

stability? Journal of Economic Dynamics and Control, 60, 42-72.

Ng, E. S., W., Schweitzer, L., & Lyons, S. T. (2010). New generation, great expectations: A field

study of the millennial generation. Journal of Business and Psychology, 25(2), 281-292.

Nielson. "Green Generation: Millennials Say Sustainability Is a Shopping Priority." Green

Generation: Millennials Say Sustainability Is a Shopping Priority. N.p., 5 Nov. 2015.

Web. 16 Nov. 2016.

Obrinsky, Mark. "Quick Facts: Resident Demographics." National Multifamily Housing Council.

N.p., Oct. 2016. Web. 21 Apr. 2017

Prevost, Lisa. "Renters Are Staying Put." The New York Times. The New York Times, 24 Apr.

2015. Web. 21 Apr. 2017.

Schroer, William. "Generations X,Y, Z and the Others." WJSchroer. N.p., 2015. Web. 21 Apr.

2017

Shuster, B. (2016). The millennial mindset. Mortgage Banking, 76(8), 68-73,39.

Smith, T. J., & Nichols, T. (2015). Understanding the millennial generation. The Journal of

Business Diversity, 15(1), 39-47.

Surveymonkey.com/summary/Y1qvQG2jb68vhW6IMy0QnJan_2FLO0ETxXVi5cN_2FRuWYd

D8p5kBrmlbJMpLK6eBGlr (My case study)

Wang, Jennifer. "Millennials Rising." Millennials and Student Debt (n.d.): n. pag.

Amazonnews.com. Oct. 2015. Web.

"What Is The Tiny House Movement?" The Tiny Life. N.p., 19 Oct. 2015. Web. 21 Apr. 2017