Trends Impacting the Millennial Investor
Millennials are the future of commercial real estate. But their investing habits, preferences, and goals are vastly different from those of other generations. Understanding this generation’s demands and expectations and adapting to those needs will be critical to successfully attracting and retaining Millennials.
What Affects Millennial Views on Investing?
The market conditions each generation experiences while growing up – in combination with current political, social, and economic events – shape how people think about finances. There are several trends and events that factor into the investing behavior exhibited by Millennials today:
- Intergenerational wealth transfer – Over the next 40 years, Millennials are expected to inherit an estimated $30 trillion in assets from their parents. This presents an opportunity for CRE firms to capitalize on heirs’ new-found wealth.
- Rising student debt – With recent college tuition hikes, student debt has doubled to over $1.4 trillion since 2009. Many Millennials feel the pressure to pay off their loans as quickly as possible instead of investing in the stock market, real estate, or sometimes even their retirement.
- Nontraditional living arrangements – For the first time since the late 1800s, young adults are more likely to live at home with a parent than in any other arrangement, as a result of Millennials increasingly delaying marriage, the rising cost of home ownership, and the pressure to pay off student debt.
- Lifelong exposure to technology – Millennials are the first generation to grow up with easy access to the Internet and with data at their fingertips. As such, they have higher expectations than other generations about speed, accessibility, and transparency related to their financial investments. In fact, 3 out of 5 Millennials would be more likely to invest in real estate if there were technology available to make the process easier.
- Growing up in the age of information – Access to the Internet from an early age has shaped the way Millennials communicate, share and consume information, and conduct research. They are used to having info, peer feedback, and recommendations readily available, right at their fingertips, and 71% of Millennials take these insights into consideration in their decision-making process, even with regards to investing.
- Reliance on social media – 88% of Millennials use one or more social networking platforms, and recent studies have found that crowdsourcing investment ideas from social-networking sites boosts returns. Social media can be used to connect with investors, build your reputation as a thought leader or industry expert, and to share updates about your recent projects.
- Demand for social responsibility –Millennials value the role they play in their communities and the impact they can have on the world, and 2/3 would choose to engage with brands, companies, or opportunities that prioritize social responsibility.
- Job hunting during the Great Recession – Many Millennials entered the job market during a period of economic decline, impacting their future earning power and causing many to defer major adult milestones such as purchasing a home. Those impacts are felt years later, as those who graduate college during bad economic years earn 14% to 23% less over the course of their career.
- Aversion to the stock market – Millennials are 3x more likely to invest in real estate than to invest in the stock market, preferring more tangible assets and those that are seemingly less volatile.
These are just a few of the factors impacting Millennial investors today and shaping the way they make decisions about investing.
