Guest Feature

A Tale of Two Millenials

By Chris Gibson, Senior Associate

Chris GibsonAs Charles Dickens famously penned in his novel A Tale of Two Cities, “It was the best of times, it was the worst of times.” Today we are seeing a modern variation of this memorable adage – but this time, it’s A Tale of Two Millennials.

Millennials, a generation of more than 80 million (that is, 25% of the U.S. population), are being closely followed by the media, undoubtedly because of the immense impact they are having on migration trends, city demographics and, most notably at Pathfinder, on apartment demand and rental rates. Unlike their parents and grandparents, millennials are marrying much later in life, choosing to focus on building their careers before settling down. They are highly educated and keen on using technology to communicate, and are thus optimistic about their ability to change their socioeconomic status. Millennials are also optimistic about buying a home someday – although, for most that dream is far off in the distant future. Despite these general characteristics of millennials, there are two distinct “types” within this generation: the first is busy with a budding career at Amazon, Twitter and similar high-flying companies, while the other languishes in his or her parents’ basement.

To better illustrate the triumphs and tribulations of these two distinct types of millennials, meet our hypothetical Mia and Liam, two millennials at very different stages of their young adult lives.

Mia is a 25-year-old with a Bachelor’s degree in engineering from Gonzaga University in Spokane, Washington. After graduation, Mia migrated to the big city for a plum job with Amazon in Seattle. Mia, who used an academic scholarship to pay her way through school, is now taking advantage of her respectable paycheck by living in one of Pathfinder’s recently renovated apartment buildings in downtown Seattle, paying over $2,000 a month for her one-bedroom unit. Mia has ambitions to get married, have children and purchase a home, but like many millennials, is not prioritizing the pursuit of the “traditional” life course. She is far more focused on her lifestyle; she feels strongly about keeping her life flexible in her new city and finds value in the apartment project’s extensive and luxurious amenities.

Apartments are redefining lifestyles, replacing gym memberships with a state of the art fitness centers, offering yoga and spin classes in designated studios, creating in-house theaters, complete with stadium-style seating, wine lockers and wine rooms, parks, libraries, indoor-outdoor cafes, and smart thermometers – to name a few popular amenities. Mia’s lifestyle and career are at the forefront of her mind – settling down to build a family is for a later time.

SeattleSeattle, like San Francisco, Denver and Portland have all seen a 25% increase in millennial population from 2007-2013 because these cities have numerous qualities desirable to young adults and professionals. Not by coincidence, these cities are also seeing the percent of median household income allocated to rent at a greater level than the percent of income to purchase a home, leaving little ability to save for eventual home ownership. On average, across 453 U.S. counties with populations of 100,000 or more, renters spent 27% of their monthly income on their leases, while homeowners spent 25% on average on their monthly mortgage payments (RealtyTrac, 2014). In the ten least affordable rental markets, a person earning median income spends 40% to 68% of their income on housing.

Student LoansOn the flip side of our tale, you have Liam. He is a 27-year old with a Bachelor’s degree in Communications and an M.B.A. from the University of Colorado. But this higher level of education has not come without great cost to Liam. Like so many of his peers who graduated during the period following the 2008-2010 Great Recession, Liam had challenges securing a high-paying job and was resigned to moving back in with his parents to help pay off his mounting student debt. As the U.S. Census reports, 35% of 30 year olds have a Bachelor’s degree or higher, compared to the 25% in the late 1970s-early 1980s. Liam is working at the local golf course and waiting tables in the evenings for supplemental income. He is eager to find a profession that reflects his aptitude and skill set but is struggling to find the elusive position amidst the immense competition of a most highly educated generation.

CG Chart 2015Liam is not alone. This highly educated generation is plagued with exorbitant amounts of student debt. According to the New York Federal Reserve’s Consumer Credit Panel/Equifax and John Burns Real Estate Consulting, millennials have amassed more than $1 trillion in student loan debt and have a delinquent balance of 90 days on 11% of that balance. By virtue of living with his parents, Liam has been able to pay down his debts and save money. A recent study by Moody’s Analytics indicated that people under 35 are currently saving negative 2% and bottomed out in 2007 with a negative 15% savings rate. Liam’s affairs since graduation have been less than ideal, but if he wants to achieve his goal of home ownership, he must persevere. For now, he trades basement residency for an improving financial situation. Though homeownership is not in visible sight for Liam, it is his motivating factor for this compromised lifestyle.

The American Dream is alive and well with the millennials, but the feasibility of it being fulfilled in the near future is hindered by a marked shift in the priorities of this powerful generation. Millennials are focused on pursuing higher education, their instant access to information on their smartphones, availing themselves of mass communication channels and striving to elevate their socioeconomic status. While millennials are less sure of their future, they still want to own their own home someday, but today is just not the day. Today, and for the near future, the change in mindset exhibited by young adults like Mia and Liam, directly translates to apartment demand. In urban environments with plentiful lifestyle options in cities like Seattle, Portland and Denver, apartment demand will continue to outpace supply and continue to drive up rents.

Chris Gibson is a Senior Associate at Pathfinder Partners, LLC. Prior to joining Pathfinder in 2014, Chris worked for a national commercial real estate management, fiduciary and advisory firm, and a San Diego-based real estate private equity firm. He can be reached at