Generation rent is fuelling the rental economy, which is projected to grow from $15 billion in 2014 to $335 billion in 2025, and as Darren Winters points out, that is a macro trend that investors cannot ignore.
Cash strapped millennials, duped generation rent are opting to rent instead of buy, particularly when it comes to putting a roof over their head
Current real estate prices in the world’s metropolis make it unaffordable for young first-time buyers.
Generation rent, the millennial generation, have shouldered the greatest burden of the central bank’s fiat currency debasement policies, dubiously named monetary easing.
Think of London 150 years ago when horses lived in mews and a middle-ranking bank clerk could purchase a Victorian three-story house in central London. Fast forward to the 90s, and you would need to be fairly wealthy to live in the same property. Moreover, today, the bank clerk’s job has been automated and only a multi-millionaire/billionaire could live in the same property. What has happened? The globalization of labor as a commodity has resulted in the productivity gains of new technology being skewed up the wealth pyramid. Furthermore, the central bank’s monetary easing policy has made matters worse by creating the real estate bubble, the bubble of everything.
Years of fiat currency debasement has now created generation rent
In the UK, forty percent of 25- to 34-year-olds won’t be able to afford to own property. Back in 1996, more than 90 percent of young adults would have been able to buy a home in their local area. Today, only around 60 percent would be able to borrow enough to buy even the cheapest properties where they live.
Average house prices in England have risen by 173 percent since 1997, compared with increases in young adults’ real incomes of only 19 percent.
It means the share of 25- to 34-year-olds who own their own home fell from 55 percent to 35 percent in the twenty years to 2017, according to new figures from the Institute for Fiscal Studies (IFS).
If generation rent is the new norm going forward then that could also support the view of lackluster consumption
Even in the most affordable locations in the country, such as Annan in Dumfries and Galloway, a lifetime’s renting will still come in at around £200,000 in today’s, according to the IFS.
As Darren Winters says, put simply generation rent will not have home equity release to finance consumption or subsidies for their retirement needs.
Where are the opportunities for investing in this era of generation rent?
A casual perusal of the chart here reveals all. The share or rent economy is fairly wide with furniture 45% being among the top items that young consumers rent.
Gaming systems comes second at 37%, clothes and tools both come next at 35%. Technology makes up 33% of the rent economy.
So the rent generation that wants everything, everywhere at any time could be set to change consumption patterns.