Now between the ages of 18-34, millennials are trendsetters in most areas, but their economic power is not that strong.
Why is the millennial consumer waiting longer to make large purchases like homes and vehicles?
Economic State of the Millennial Consumer
Now the largest group in the workforce, millennials are also the most educated generation, with more consumers in that age group completing college than their parents and grandparents before them.
A while back, having an education set you apart from your peers. There is now pressure to gain even more education (Masters Degree, PhD) just to stand out. What comes with higher education? More student loans (oh boy!).
According to Pew Research, the millennial generation has higher student debt than any previous generation. This leaves them with less money left over for big ticket items like cars and houses, as their monthly student loan payments prevent them from saving up for a downpayment on one of those big ticket items.
Millennials also came of age at a less than desirable time for the economy, many beginning their job hunt during the recession. They have thus been coached not to expect financial security. Many are comfortable with a self-employed lifestyle, looking to gigs and freelance work for income; and many industries, in turn, have moved to using part-time or contract workers to save money, having no need to pay out on costly things like health insurance.
Most millennials don't expect any money to be left in social security for them when they reach retirement, which doesn't bode well for those planning to retire at a traditional age, such as 60-65.
Generation Y is also waiting longer to get married. At the age they are now, 48% of baby boomers were married, where as only 26% of millennials have tied the knot. The delay in growing a family could also contribute to the delay in big purchases. There are a number of millennials living at home due to debt, or because they are still in school, or in an advanced degree program (creating more debt).
What to Expect From Those in Debt
For realtors, this may mean exploring other options for the millennials looking to get into a home. Renting to own, mortgaging, and painting a full financial landscape may be necessary for the millennial consumer to get into their first house.
Car companies will need to be conscious of the millennial tendency to rely heavily on consumer reviews. Also, because many are waiting until they are older to make these big purchases, they will be considering more practical models.
We learned about millennial search behavior in an earlier article. Previously discussed was how traditional methods of advertising have proven less effective with this generation, making marketing to millennials a new ball game.
They may not all have the high paying job positions yet, but they will. When they do, what can we expect from the buying behavior of the millennial consumer moving forward?