I saw a Maybach the other day. Yeah, I didn’t know what it was either. Turns out a Maybach is the 2nd highest rated luxury car in the world, only behind a Rolls Royce. And, depending on your options, you can drive one off the lot for a little over $200K.
The National Association of Realtors (NAR) puts the average home in Atlanta a little over $200K or basically, one Maybach.
The reason I mention these two seemingly disconnected facts is because over the last several months I have read dozens of articles explaining why Millennials aren’t getting into the housing market in the same numbers as previous generations. Most articles cite college debt as the leading contributor. A sad fact of life for this generation. But, after college debt, most articles focus on lifestyle, often berating people for their choices. What is avocado toast anyway? And yes, we all know older generations were tougher and had more hardship. But, is the price of latte really the villain holding Millennials back from entering the real estate market?
As I pondered the monthly payment on a Maybach, I did learn the “average” cost of owning and operating an automobile is: $8,698.00 per year, or $725 a month. This amount includes an average price for insurance and gasoline, but nothing toward the cost of parking. Now, imagine the impact automobiles have on your “ideal” home buyer. Who is the “ideal” buyer? How about a married couple with a young child?
Our “ideal” couple most likely has 2 college loans, over $1,500 a month spent toward cars, plus hundreds more every month going out to day care. Exactly where is the hat the rabbit comes from? Loan commitments and daycare costs are not optional. Automobile ownership is. Could our addiction to cars be holding us back? Is it possible the Country who created the ultimate “car culture”, is finally tiring of it?
It’s a fact, Millennials are ditching their cars in record numbers. They are the first American generation to do so in any significant numbers. Cars are a huge cost and a hassle. Riding around via a shared automobile experience like a ZipCar or uber, is much more practical. Combine that with low-cost mass transit and peddle power and the cost justification for owning a personal private motor coach seems almost; Maybachish
I suspect a large reason many Millennials are slower getting into real estate is because, as a society, we haven’t built what they want. Americans are set up to need an automobile. The car has been our way of life for way too long. For those transitioning away from the car, their choices of where to live will be very limited.
If Atlanta had the mass transit of Chicago, New York, DC or Boston our story would be different. But, we do not have the threadwork that joins our city to its suburbs. (Yes, we have limited MARTA, which helps) Millennials in Chicago, New York and elsewhere have infinitely more choices for living auto-free than Millennials have here in Atlanta.
Limited housing makes for a very competitive market. Highly competitive markets keep many people on the sidelines. Too many buyers on the sidelines stunts overall growth and creates thousands of blogs.
If auto-free housing were plentiful, I don’t know Millennials would be doing anything different than previous generations. But we aren’t there yet.