Fry: “As millennials have matured and grown up, they have acquired a lot of education; in fact, they are the most-educated generation in history in terms of formal attainment.”

CHICAGO—Millennials, Gen-Xers and baby boomers have distinct demographic profiles and approach jobs, debt and their living situations differently, Pew Research Center senior researcher Richard Fry, Ph.D., tells Fry will be presenting the session “Piecing Together the Population Puzzle” during NAIOP’s CRE.Converge conference here Oct. 10-12. The session will dive into the patterns and predilections of demographics, related economics and what it all means for CRE. We spoke with Fry about how millennials’ characteristics have changed over time, how debt influences their living-situation decisions and how Gen-Xers, millennials and baby boomers differ in their economic perspectives. What has changed about the characteristics of millennials over time?

Fry: The Pew Research Center currently defines millennials as adults ages 18 to 36. There are at least three things have changed for the millennials over time, and some of them will continue to change. Demographically, immigration has changed them and it is going to continue to have an impact on them. In 2015, the number of millennials in the US was about 75 million, and according to Census Bureau population projections, this number will peak in size to 81 million in 2036, so this group is still growing. The reason for this growth is when the US receives immigrants, they tend to be in the family or early-working years, and most arriving immigrants tend to be in the age range of 17 to 44—the young-adult years. So, millennials demographically are changing; they haven’t peaked in size yet and are going to continue to grow.

As far as labor market outcomes, millennials were clearly pretty hard hit by the recession and downturn in the US labor market. But the good news is that now, in 2017, the US economy is back near full employment: we’re at about 4.3% unemployment nationally. The labor market is back to where it was in 2007 before the Great Recession. It was a very painful, long, slow recovery, but this group’s labor-market outcomes are largely back to where they were before the damage was done.

Also, as millennials have matured and grown up, they have acquired a lot of education; in fact, they are the most-educated generation in history in terms of formal attainment. During the recession, many millennials went back to school because they couldn’t find work. Among the older millennials, 25- to 35-year-olds, about 37% of them have a bachelor’s degree or more—that’s nearly four out of 10 who have a college education. Among Generation X, when they were the same age as millennials are now, only 29% of them had a college degree. How does debt (for example, from college expenses) influence where millennials locate and whether they rent or buy?

Fry: Research done in part by the Federal Reserve banks does suggest student debt is having an impact on their residential choices. More of the newly minted bachelor’s degree holders have had to borrow to go to college, and the amounts they are borrowing have increased to somewhere around $30,000 on average, which is more than what those who graduated in the 1990s borrowed.

In order to manage their debt loads, save on expenses and maintain their credit scores, many more of them are choosing to live with their parents. In 2016 15% of 25- to 35-year-olds lived at home. The evidence isn’t as strong regarding whether this is impacting homeownership. It’s having some impact, but maybe not to the degree that some suggest.  Home ownership is clearly down among young adults.  In 2016 it was at its lowest level in at least 40 years. Gen-X is often the “forgotten generation” but many (Elon Musk, Michael Dell) are innovators and leading top businesses. How does this generation fit in with the retiring boomers and the forceful millennials?

Fry: Both demographically and politically, Generation X is sort of between the boomers and the millennials. Demographically, Generation X is significantly less white than the boomers, partly reflecting the impact of immigration. Millennials are about 56% white, and boomers 72% white, while Gen-X is in between (60% white).

Gen-X is in between the boomers and the millennials on political attitudes, too. They identify as more liberal than boomers, but less liberal than millennials.

Generation X may get less attention, but I like to study young adults so I pay attention to how Generation X was doing as they came of age. They went through the early adult years of 25 to 35 in the late ’90s, during the second Clinton administration and also during the dot-com boom. The years between 1995 and 2000 were notable because by 2001, the unemployment rate was low, labor markets were tight and wages were rising. So, Gen-X came of age in relatively hot job market, and those also were the years—2000 to 2006—when they were getting into homeownership. By then, the homeownership rate nationally was at a peak, in part because Gen-Xers were buying homes. Millennials during the recession saw a loss of equity and homes going underwater among their parents’ generation, so homeownership was not a millennial thing—it was the Gen-Xers who suffered. Because home prices were high, they borrowed a lot, and leverage is great when home prices are rising, but perilous when home prices fall. Because they were so highly leveraged, they got hit hard during the recession, more than any other generation, Gen X bore the brunt of the loss of home equity. They didn’t have much, and they owed more on their homes than they were worth. Some of those people got foreclosed upon and lost their homes; they got whipsawed. Their early-adult years were good up until the dot-com boom, but took it hard when home prices turned down in 2006.