Where Do Echo Boomers Live?

Note that this article has been updated to also include some of the private discussions with thought leaders in the past. You can read my final overview of my research into the Millennial generation along with what I predicted and what happened as they matured at this link. While I still speak about Echo Boomers and iGenZ privately, I seldom add new articles to this specific blogspot site. If you're reaching out about a speaking engagement, you can contact me at the research firm SqlinSix.

And Where Will They Live In the Future?

Within the age range of 18-28, 54% of Echo Boomers live in the suburbs (32% live in the "central city"). Considering that fewer than 11% of Echo Boomers are homeowners as of 2011 (see this article for details), I see a few possibilities about Echo Boomers and homeownership.

If transportation costs can stay low, the suburbs might continue to offer the preferred place for Echo Boomers to live. However, in order for transportation costs to stay low, alternative transportation options must surface. I doubt the price of oil will ever return to below $3 a gallon for a sustainable period of time (though, anything is possible), and thus other transportation options, such as electric vehicles or natural gas vehicles, must rise in popularity. If Echo Boomers don't spend time worrying about how much higher the price of oil will go, some of them may place down roots and start buying homes.

However, if oil continues to be the preferred method of transportation, I would expect few Echo Boomers within the next decade to plan buying a home. Why? Because Echo Boomers can't bet that their standard of living will improve in the future, so throwing money down a home could become a major liability. Remember that the pain of $4 a gallon is still fresh in their mind along with the recessionary effects that $4 per gallon created.

I'll add another trend I've noticed: From 2010 to 2011, fewer Echo Boomers have expressed interest in eventually buying a home. For instance, in 2010, about one third of Echo Boomers stated that they wanted to buy a home within the next five years. In 2011, only about 20% of Echo Boomers express interest in buying a home within the next five years. While the change may seem confusing, when we consider how much food and oil prices have changed within the last year - reducing Echo Boomers' purchasing power - we can see that Echo Boomers remain dubious about a positive financial future.

Nonetheless, with 54% of Echo Boomers currently in the suburbs, I'd expect that some of them will eventually settle down to buy homes.

Popular Real Estate Development Example - The Domain In Austin Texas

Other Housing Articles:

Do Echo Boomers Just Own or Rent?

No Houses Please. We're Echo Boomers.

Will Low Marriage Rates Sap the Future Housing Demand?

Do Echo Boomers Just Own Or Rent?

Note that this article has been updated to also include some of the private discussions with thought leaders in the past. You can read my final overview of my research into the Millennial generation along with what I predicted and what happened as they matured at this link. While I still speak about Echo Boomers and iGenZ privately, I seldom add new articles to this specific blogspot site. If you're reaching out about a speaking engagement, you can contact me at the research firm SqlinSix.

New Options To Be Added This Year To the Millennial Data

I've dislike the rent vs. own portion of my study because many of the Echo Boomers I speak with do not own or rent. After six months of collecting and compiling data from a variety of sources when speaking with Echo Boomers, I began to realize that I left out an important category: living with relatives or friends.

[Update: dead image]

While I am unable predict the exact results, I can state that around 2-4 Echo Boomers live with their parents for every one Echo Boomer who owns a home. However, with this category added to my study, I'll begin to gain an understanding of what percent of Echo Boomers as neither renters nor home-owners.

According to a recent study [updated link], many Echo Boomers move back with their parents. While this act may have been stigmatized in former generations, among Echo Boomers, moving in with relatives or friends makes economic sense. Based on the Echo Boomers who live with their relatives, I see three major reasons why this option makes good financial sense.

1. Service salaries don't cut it. Many Echo Boomers fail to bring in median income (around $50,000) and lack the financial power of others. If their income is low, they can adjust their living expectations to increase other options. Most Echo Boomers, who live with their parents, do not pay rent. This helps them save either for a home, or helps them hold out until a decent job and salary come along.

As an added note to this point, many Echo Boomers, who rent, share their apartment or homes with multiple roommates (beyond the trite 2 roommate per household). This indicates that many Echo Boomers are trying to save any little income they can.

2. The recession is encumbering them from finding good jobs. Many Echo Boomers have moved back home because the economy isn't offering them jobs in areas they would like to live. Most Echo Boomers living with their parents admit they would like to live on their own, but the recession has kept jobs from opening up in areas they would like to live. A lack of jobs not only encumbers their income, but restricts where they can live.

3. Food and gas prices are pinching their wallet. Echo Boomers will lack the homeownership power of former generations as long as gas and food prices continue to remain high. If you're losing more money every year from rising prices, you must save in other areas. Many Echo Boomers are choosing to save their money based on where they live, and living with relatives seems to be their favorite option.

Cultural Differences

One important point worth highlighting here: culture matters. Home-ownership has been hyped by American thought leaders. But the United States has a significant (and growing) number of people who are here that were not born in the United States. They do not value home-ownership and they also view a lot of the bureaucracy as both contradictory and odd.

"It makes no sense to own a home that only makes the bank rich," Louisa said, an Echo Boomer allegedly born in Mexico who came to the United States with her family less than a decade ago. "I'm near a million in wealth, but I still won't buy a home. My sisters and I live with our parents. We love it and we don't see a need to own a home." She highlights a big gap in culture: their culture doesn't value home-ownership, but community - specifically family community. [Note that I don't include Louisa or her family in my study, as I cannot validate some of what she claims, so at most I write "allegedly" as it could be a stretch of the truth on some of what she says].

"It's not just home-ownership either," she explained. "My parents take care of my children. I'm not going to pay for childcare. I feel the exact same with other big expenses like car repairs, law help, and accounting. I have family in all those industries."

While Louisa states that her parents own a large house on a decent size piece of land, I'll note people who live like her don't actually need higher incomes. They're also far less dependent on the system. When people complain about rising costs or prices, they're really complaining that their income isn't rising as well. This isn't the case for Louisa. For an example, if her statement about getting free car service is true (I cannot confirm), this means that a $1,000 after tax expense for most people is $0 for her. The same also applies to her rent. While most young people her age pay $800-$1100 in after tax rent for the type of living quarters she claims, she's paying $0.

You can imagine what happens over a 40 year period of time with people who live like this versus people who have to pay for all the services they need. Culture matters and people who believe that families should work and coordinate together will be ahead of people who don't have families or fight with their families about everything.

The Other New Category

Another group that I've added, though the data for this group will come from specific sources, is homeless. Some Echo Boomers can't afford to own, rent, and don't have families or friends to help. What happens to them? Homelessness.

One repetitive point I say about Echo Boomers that few have listened to is that they will not outlive their parents when comparing life expectancies. People do not understand how significant this is and most people think I'm wrong here. However, over time, I will be validated on this point. Echo Boomers will fall short of their parents life expectancies. Homelessness will be a part of why Echo Boomers don't live as long as their parents.

"No Houses Please. We're Echo Boomers."

Note that this article has been updated to also include some of the private discussions with thought leaders in the past. You can read my final overview of my research into the Millennial generation along with what I predicted and what happened as they matured at this link. While I still speak about Echo Boomers and iGenZ privately, I seldom add new articles to this specific blogspot site. If you're reaching out about a speaking engagement, you can contact me at the research firm SqlinSix.

3 Reasons Why We Won't See A Demand For Housing Among Echo Boomers For a While

"I want to buy a home in the next five years or so, but honestly man, I don't know how I'm going to do it. I just don't make that much money." ~ One out of many Echo Boomers who've said similar statements

Housing prices fell, so it's a good time to buy, right?

Not if you're an Echo Boomer. For all the articles about Echo Boomers being one of the largest generations in American history (some saying the largest, some saying the second largest), this generation lacks the financial power it will take to buy a home. Add to that encumbrance the fact that some Echo Boomers don't want to buy a home; wanderlust has more appeal to these Echo Boomers. We may see a housing recovery in the next few years, or we may not. However, one thing is certain: at this present time, Echo Boomers won't be driving the housing recovery.

1: Echo Boomers have light wallets.

Suppose that half of Echo Boomers wanted to buy a home tomorrow, and put in an application. How many of them would be approved? In the traditional sense, not even 10%, but if some managed an FHA loan where they had to put a minimum down, we might see more homeowners - though, there would be more problems if that occurred.

Before dealing with non-traditional loans, let's review how prepared Echo Boomers are for a traditional down payment of 10-20% on a mortgage. The below graph is the financial distribution of Echo Boomers with a red line showing a rough estimate of how much Echo Boomers would need in assets for a small down payment. On this graph, I used $15,000 as a minimum amount - which keep in mind, would only be a 20% down payment for a $75,000 home. But we don't expect Echo Boomers to buy $200,000 homes yet, right?

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The biggest problem with the above graph? In many areas, a $75,000 home would be an excellent deal - many Echo Boomers will need much more than $15,000 for their first home.

Of course, the most obvious rebuttal I hear is that Echo Boomers could try other loans, like an FHA loan where they could put down less than 5%. The trouble with this logic is that it fails to consider any financial emergency after Echo Boomers buy a home. As we can see from the above graph, few Echo Boomers are prepared to buy a home, and in many cases, they would be stretching their net worth to buy a home. What would happen in a financial emergency? A Millennial housing boom might quickly turn into a housing bust with so many Echo Boomers walking below and on the line.

Remember the following data:

[Update: dead image]

90% of Echo Boomers have fewer than $1,500. Does that sound like a massive generation waiting to buy a home? One financial emergency, and they would be exiting their mortgage. By contrast, 20-25% of foreign Echo Boomers look like they're ready to buy homes, only there are fewer of them. Add to that the fact that many foreign Echo Boomers live in the United States for education only, and plan to return to their homeland when they are finished (as a general trend, most Indian and Chinese students tell me that they intend to return to India or China when they complete their college degree).

My major take-away point here is that Echo Boomers lack the financial power to buy homes. Things may change in the future, but for now, we shouldn't expect to see them rushing to buy homes. If they do without building assets first, based on the above data, we may see a terrible bust shortly thereafter.

2: Do Echo Boomers want homes?

"Why would I ever buy a home? You can say that renting is 'throwing money away,' but you'll never get all the money you paid in maintenance back, so ..." ~ One of the many skeptical Echo Boomers about homeownership

A real estate agent's worst nightmare: someone who thinks homeownership is "throwing money away." However, skeptical Echo Boomers have a point: the time and money that goes into home maintenance is never recovered, nor the money paid to interest, nor the money paid to homeowner's insurance. For all the praise of owning a home ("building equity" or "best investment"), the downside is seldom spelled out for people - until recently. For an example, the Nobel prize winning economist, Paul Krugman, questioned home ownership.

Granted, this is not a popular notion here in the United States, but it is a valid statement. Renting, in some cases, is superior to home ownership.

I speak with many Echo Boomers who love to move around a lot, and don't intend to stay in their area. If they plan to move to other states or cities, why buy a home? Not only is there the costs of insurance, interest and maintenance, but you can't always rely on your home selling for what you paid for when you're ready to move. The last thing you want when you receive a job is to be tied down to a home.

While it's difficult to assess in the long run, Echo Boomers may not be a generation that values home ownership as much as former generations. Pendulum swings of society often go back and forth (consider this with iGenZ and note they may favor home ownership earlier at comparable ages). Echo Boomers may be the backlash generation against home ownership. Or, Echo Boomers are currently responding to their economic reality and will eventually buy homes. One thing is certain, however, Echo Boomers don't want homes right now.

3: Your graduate degree is your castle.

"Personally, I'll take a Ph.D. over a home." ~ An Echo Boomer expressing financial goals

Echo Boomers value higher education, above and beyond the basic undergraduate degree. Throughout college, I read that bachelor's degrees were the new high school diploma, while professional degrees were the new college degrees. True or not, this fever caught on as more Echo Boomers tell me their goal is to continue their education beyond an undergraduate education.

The problem, however, is that a graduate degree is not always a path to a higher income. As a case in point of this, many people in my profession bring in a higher income than many college professors with Ph.D.s. Add to that my profession doesn't require a college degree whatsoever, so even someone like myself, who wasted a few years in college, is behind others, who remained in my profession without wasting money on education. The point here is that higher degrees don't mean Echo Boomers will be wealthier in the future.

Higher education can bring costs in the form of student loans. These massive loans for graduate degrees (often in the $40,000 to $60,000 range) might be the mortgage of the future. Keep in mind, many Echo Boomers will defer payments, only increasing the principal balance of their student loans. The financial commitment these Echo Boomers have to higher degrees limits their other possibilities, like buying a home.

(Higher education costs time. The same time a person invests in higher education could be invested in doubling work on a job to build experience or working a related job. A person could also invest that time in creating a business. I often speak of the financial cost of education, but it's worth noting the time cost for education that will possibly impact delayed home-ownership over time.)

Even if we assume that Echo Boomers with graduate degrees will make more money, we must also state that many of them will also possess more debt. This debt will lengthen the time it takes them to buy their first home (assuming they want one), and will limit the type of home they can buy. You may think, "But they have a higher income," but the reality of costs toward commitments adds up quickly.

The final point on graduate degrees is that they increase an Echo Boomer's opportunity in the form of work, while limiting an Echo Boomer's opportunity in the form of costs. Essentially, these Echo Boomers have more doing freedom, but less consuming freedom. However, this may be a reflection of Millennial values - doing beats consuming. But if that opinion remains prevalent among Echo Boomers, home ownership will lack any appeal.

4: Remember the Pendulum [update from private discussions]

Be careful about reading that Echo Boomers won't ever become home owners. The Baby Boom generation lived one of the freest existences in American history - "We'll drop everything we're doing and go to California" (an actual quote from a teacher in high school who boasted about their life without car insurance or a need to have a job). What did Baby Boomers do? Create the most bureaucracy they could imagine. Why? People often rush from one extreme to another extreme, rather than moderating their position.

Echo Boomers may be the same. They may not favor home ownership in their youth, then turn into the strongest advocates of it ever. It's impossible to know, but I caution people on taking extreme positions under the assumption that "people will always think" a certain view. People change. Realtors can use this time for a possible future pivot and that also leads me to the next point.

Often the generation that follows a generation will have different beliefs. iGenZ at a comparable age may favor home ownership. A high demand for renting may cause rents to become unaffordable or absurd relative to home prices. In the same way that no Echo Boomer understands a world of "no car insurance" (Baby Boom generation's youth), someone from iGenZ may not understand why Echo Boomers preferred renting over owning.

Will Low Marriage Rates Sap Future Housing Demand?

Note that this article has been updated to also include some of the private discussions with thought leaders in the past. You can read my final overview of my research into the Millennial generation along with what I predicted and what happened as they matured at this link. While I still speak about Echo Boomers and iGenZ privately, I seldom add new articles to this specific blogspot site. If you're reaching out about a speaking engagement, you can contact me at the research firm SqlinSix.

As an Echo Boomer, I often hear from adults that the lack of interest in marriage among Echo Boomers will suppress housing demand. In fact, a recent study [Update: dead link removed] has been used by some adults as evidence that Echo Boomers will have low marriage rates, and thus a low demand for housing.

First, I've written about the housing recovery and will write more in the future with pertinent economic data. Frankly, marriage rates of Echo Boomers are far less of a concern than the Millennial financial data. This is not a generation that looks prepared to own homes.

Second, female Echo Boomers that are unable to find partners tend to express interest in owning a home later in life regardless of their marital status. Male Echo Boomers, by contrast, do seem satisfied with renting. My point here is that even if all Echo Boomers stayed single (already untrue), and most female Echo Boomers bought homes and most male Echo Boomers rented, you'd still end up with similar numbers for housing demand in the future plus you'd have added rent on top of that. More single men and women mean more demand for housing in general, though this demand will be for both homes and places to rent (apartments, condos, etc).

Remember that a large generation with more single people will require more housing in general of any type.

Third, marriage doesn't equate to home ownership. Although married Echo Boomers I speak with tend to mention interest in owning homes more than single Echo Boomers, a few single Echo Boomers have already achieved home ownership.

Oph Topik: 3 Housing Recovery Denials

Note that this article has been updated to also include some of the private discussions with thought leaders in the past. You can read my final overview of my research into the Millennial generation along with what I predicted and what happened as they matured at this link. While I still speak about Echo Boomers and iGenZ privately, I seldom add new articles to this specific blogspot site. If you're reaching out about a speaking engagement, you can contact me at the research firm SqlinSix.

In the financial industry, we hear a lot about a possible housing recovery. In fact, the trite sell line for housing is, "It's a buyer's market because, pretty soon, houses are going to cost much more." However, in order for housing prices to rise, there must be a significant demand, and I see three major encumbraces to the housing recovery.

1. The Millennial financial data. Remember, Echo Boomers are the second largest American generation in U.S. history. However, from reviewing the data, does it look like they are ready to buy homes?

2. If oil prices continue to remain high, or climb higher, even current homeowners will feel the financial pinch. And Americans, who don't own homes, won't consider adding another financial obligation. With high energy prices, renting provides the flexibility for a person to move where it's close. If they lose Job A, they can move closer to Job B. A person, who owns a home, cannot move anywhere - they are restricted.

3. Uncertainty is dominating the market. Look at the rise of food prices alongside oil prices. If people feel like they won't be able to afford food or energy in the future, they won't commit to homeownership. When I talk to people who are ready to buy homes, they feel financially stable in their lives. If instability and uncertainty continue, people will continue to avoid any homeownership commitment.