Millennials are those born from 1981 to 1996 — the youngest are fresh out of college and just starting their careers, while the oldest millennials are well-established in their careers and have started families.
Generally, renting allows millennials the flexibility to stay nimble in the job market and continue paying off their large amounts of debt before settling down. Millennials have more options available to them when renting instead of being tied down by a house.
Drowning in debt
One major reason millennials are continuing to rent is that many are still trying to pay off large amounts of college debt. As of February 2020, U.S. student loan debt reached a record-high $1.6 trillion — and that was before the COVID-19 pandemic. Add in the pandemic and its financial woes, and millennials may be even less inclined to buy a house and sign on to a 30-year mortgage.
Although a monthly mortgage payment may be similar to a monthly rent payment, buying a home usually also means coming up with a 20 percent down payment — which many millennials don't have in the bank. Saving up for a down payment while also paying large monthly student loan bills can often make buying a home out of reach for millennials — especially those early in their career.
This trend looks to continue with Generation Z (those born in 1997 or later), who will have even more student loans as a result of the pandemic. We're seeing those in this generation move back in with parents to save money or continue to live with roommates even after college to cut down on bills.
Settling down later in life
Millennials tend to marry and start a family much later than their parents — they're 10 to 20 percent less likely to have married in their 20s than their parents. Not only that, but the median age of first marriages is also the highest in history — 29 years old for men and 27 for women. By delaying marriage and the joint income that comes with it, many millennials opt to continue to rent until that day comes.
Additionally, millennials are much less likely to have children at this stage in life than any previous generation — three in 10 millennials live with a spouse and child, compared to 40 percent of Gen Xers at a comparable age. Without the need to settle down and worry about finding a good school district, many are opting to delay buying a home.
Millennials are also more mobile than other generations — 73 percent of millennials plan to move in the next 10 years, compared to 58 percent of Generation Xers and 42 percent of baby boomers. In addition, millennials pack up and move, on average, once every 2.2 years, compared to 3.7 years for Generation Xers and 5.7 years for baby boomers.
It makes sense then that millennials would avoid the hassle and extra cost of buying or selling a home and instead opt to continue renting. It can be easier to get out of a lease than to try to sell their home fast.
Change jobs more frequently
Millennials enjoy the flexibility of renting, as they switch jobs more often than older generations. More than one in five millennials have changed jobs in the past year — more than five times that of non-millennials.
Even if the job change doesn't require a cross-country move, millennials may still switch homes to move closer to a job within the same city. Buying a home simply complicates things and can make a new job more of a hassle than an exciting new chapter.
Renting fits millennial lifestyles
Perhaps one of the main driving factors keeping millennials renting is simply the desire to do so. Renting fits many millennials' lifestyles much better than owning a home.
Although their parents may have lived in the same home and stayed at the same job their entire working lives, millennials prefer more flexibility and value a rewarding, meaningful career over a stable, consistent one. And renting allows them to pursue these ambitions more easily.