business news in context, analysis with attitude

by Kevin Coupe

Interesting piece in the Washington Post about "the differences between millennials’ financial trajectory and those of earlier generations: In 1990, baby boomers, whose median age was 35, owned nearly one-third of American real estate by value.

"In 2019, the millennial generation, with a median age of 31, owned just 4 percent."

The story makes the point that "millennials, many of whom are entering their prime home-buying years, are likely to make up some of that gap by the time they see 35. But they’re not likely to reach 30 percent of the housing market — or even the 20 percent attained by the smaller Generation X at the same point in their lives."

The big factor in this shift, the Post writes, is debt:

"Millennials’ massive debt burdens also make it difficult to them to save for a down payment at any housing price. For households headed by someone younger than 35, median debt ballooned from $21,000 in 1989 to $39,000 in 2016. During that same time period, the percentage of under-35 households with student loan debt more than doubled, from 17 percent to 45 percent, and their median debt more than tripled, from $5,600 to $18,500."

And, even as "baby boomers slowly age out of homeownership," making available a "projected $13.5 trillion in housing inventory," the fact is that "millennials and younger generations might not be able to afford them."

The question that retailers need to ask themselves: What else will these folks be unable to afford?

This trend, of course, will raise other questions. Like, what will happen to an economy that largely depends on consumers for growth if a significant percentage of the population cannot afford to purchase the item that for most people becomes a major way to build wealth? What will happen when these factors run headlong into an economic recession?

How will retailers - many of them already in economic distress because of changing consumer habits and the requirement that they invest more and more capital just to keep up and remain relevant - adjust and compensate?

I have no answers for these Eye-Opening questions. But I think they are worth asking, and beginning the search for the different answers that will work for different retailers.
KC's View: