The Millennial generation (those ages 18-35) is currently the largest segment of the U.S. population, and their impact on economic trends and spending is quite powerful. With a fundamental shift in spending habits, Millennials are choosing to spend their hard earned capital on experiences over material goods.
The largest generation’s spending habits are affecting the stock market, as leisure and travel-related stocks are reaching new highs since the 2011 Recession (CNN Money). This is further compounded by record low oil prices, which means Millennials will be spending less of their limited earnings on gas. This excess income gives them the opportunity to put even more spend towards leisure and travel activities (NY Times).
What This Means for Real Estate Investors
As Millennials favor experiences over saving and investing, this mindset affects other areas of the economy, such as real estate. Overall, Millennials are quite happy choosing to rent instead of purchase a home. Homeownership levels are at the lowest they have been in decades, and with the majority of new household formations being Millennials, rental numbers are on the rise. For real estate investors, this is beneficial as the renter population is projected to increase. With the oversupply of renters and heightened demand on rental properties, the current market is primed for investing in real estate.