Guest Post by Ajay Yadav, CEO & Founder, Roomi
Real estate is one of those industries in which things can change on a dime. From minimalist living to crown-molding to a decrease in median down payments, the industry has seen it all.
There is one trend that we didn’t quite see coming (but we’re glad is here), and that’s the steady rise of roommates and shared housing.
The generations before us approached real estate in a pretty straightforward way: Live with your parents, rent, buy, buy bigger, then buy smaller (or rent again). The “upgrade” from renting to buying was the most notable transition, as that signaled a boost in maturity and income.
In other words, when you decided to buy, you were officially “adulting.”
This same transition isn’t quite as obvious for Millennials and Generation Z (or “Gen Z-ers”). When our income increases, buying isn’t the first thing on our minds. Our rental stories also hardly follow a chronological order.
Not only are we scoffing at the proposed pattern of “college, work, marriage, family,” but we’re also ignoring industry norms that have dictated the “appropriate” ages for renting, roommates, and shared housing.
Roomi recently compiled a 2017 EOY report revealing some interesting real estate data. Below, I’ll review the top-line trends and weigh in based on my experience – both as a renter and Roomi’s founder.
Why People Rent – with Roommates – for Longer
Almost 70% of Roomi’s user base are Millennials.
Officially, the Millennial generation includes those born between 1981 and 1997. That means the vast majority of renters (at least on Roomi) are between ages 20 and 36.
Why are people living with roommates for longer? Once our parents hit their mid-20s, it was pretty normal to buy… alone. Shouldn’t we be doing the same?
Here are my thoughts on this trend. For one, renting and living with roommates is affordable. Renting doesn’t automatically translate to a lower income; it just means that you prefer to spend less. There’s nothing wrong with that.
Secondly, why not? If you like someone, enjoy their company, get along, and have similar lifestyle preferences, why not share space and expenses? Gone are the days where people live alone and/or buy just ‘cause it’s time.
Today, Millennials and Gen Z-ers are taking a harder look at what they want for their lives and breaking the status quo to make it happen. Shared housing is one way these folks are living their way.
Let’s take a look at some ways people are co-living around the world.
Roam is an international network of co-living opportunities. For a weekly or monthly fee, Roam users have access to a wide variety living and working communities across the globe. They can travel and live how, where, and however often they please. These opportunities wouldn’t be available to someone who’s signed a one-year lease...much less someone who owns a home. Programs like Unsettled and Remote Year follow similar designs.
The mission of these companies is to help you design your life by living with others. Shared housing not only affords you the opportunity to spend less money and meet more people, but it also gives you the flexibility to move around as you please and “sample” different living situations.
Millennials and Gen Z-ers have recognized this opportunity – and fully embraced it. That’s why they putting off buying and ignoring industry norms that have dictated roommate situations for years.
The Core Difference Between Millennials and Gen Z-ers
Millennials and Gen Z-ers may be the two most active generations in the rental market, but their specific rental behaviors definitely differ.
One main difference between the two generations involves trust. We see this reflected in their background check activity. According to Roomi’s 2017 EOY Report, over 40% of Gen Z-ers require a background check from potential roommates. On the other hand, only 30% of Millennials do.
It’s clear that Millennials are a more trusting than Gen Z-ers. Why?
Well, think about it: They were raised with technology and have found strong connections with others online. They've seen more success in their parents’ and family's life and have trust in the system. Millennials also build more mission-driven, socially-conscious enterprises. This trust, in turn, has transitioned over to being open and trusting with strangers – in person and online.
On the other hand, Gen Z-ers – those born between 1995 and 2014 – haven’t seen as much success in their families and parents’ professional lives. They’ve built emotional walls that have left them more practical and logical than philosophical and trusting. It makes complete sense that this generation is 10% more likely to require background checks.
This also speaks to their behavior toward those who are 420-friendly. According to Roomi’s report, 26% of Gen Z-ers said they were 420-friendly, whereas only 19% of Millennials reported this preference.
Considering how these two generations were raised, Millennials explored and trusted new experiences. Gen Z-ers, on the other hand, learned from data and hard facts. It’s how they make up minds.
When it comes to being 420-friendly, Gen Z-ers look at the facts and decide whether or not this preference is OK. To them, there’s very little factually wrong with being 420-friendly (whereas Millennials and older generations might have moral or legal problems with it).
Gen Z-ers approach housing and roommates the same way – practically and with caution.
As Millennials and Gen Z-ers age, I believe we’ll see a shift into an era of shared housing. People will choose to live with others to diversify their experiences and afford other opportunities, like with Roam and Unsettled.
Instead of people claiming and buying their own space, they’ll instead be renting and sacrificing real estate to experience more of the outside world. I believe the marketplace as a whole will turn to a shared economy, encouraging trust between everyone. We already see this with programs like Roam, Airbnb shared and private rooms, and even uberPOOL.
Sharing is going to become the norm – the common way to live – and Roomi is on the forefront of this movement. Won’t you join us?
Connect with Ajay on Twitter.