In a recent interview with 60 Minutes Australia, Melbourne-based millionaire and real estate developer Tim Gurner gave his thoughts on why millennials aren’t able to afford houses.
— 60 Minutes Australia (@60Mins) May 15, 2017
According to Tim, it’s because we’re “buying smashed avocado for $19 and four coffees at $4 each.” He was immediately lambasted online for his comments and on the surface, I agree that it’s a ridiculous thing to say. We can’t afford houses because we’re eating too many avocados and drinking too much coffee? Nevermind that Tim Gurner got his start in business thanks to a $34,000 loan from his grandfather. A more accurate explanation is that we’ve inherited an unaffordable housing market, outrageous rental prices, poor job prospects and degrees of watered-down value.
But here’s the part that will likely turn more than a few people in my own age group against me; he’s right. Tim followed his controversial comments by saying “We’re at a point now where the expectations of younger people are very, very high”, and I completely agree with him. We expect it all, and we expect it all right now. We’ve been called the Generation of Entitlement and I see it all the time, even in myself at times. And I have a theory for why that is.
The generation who lived through the Great Depression and WWII – my grandparents generation – grew up during some very hard times, when families were big and everyone was poor. When they had kids of their own – my parents’ generation – they were tight with their money so as to never be in financial trouble again. Then my parents’ generation became adults and decided to have all the fun they didn’t get to have under their own penny-pinching parents. Vacations, vacation properties, boats – this is how many of my friends grew up. Their families weren’t necessarily wealthy – their parents just had good job security and wanted to enjoy their money.
And now my generation, who have known nothing other than the lifestyles provided by our spendthrift parents, have come to expect that same standard of living. We want a certain type of place (not too dated) in a certain neighborhood (nothing sketchy). We need to take trips every year and prefer to drive decent vehicles but we still want to go out on the town, which of course requires cool new clothes. Obviously this description won’t fit everyone from my generation. You and your friends may come from more humble beginnings, in which case my theory will not apply. But there are many people my age who aren’t willing to deprive ourselves of anything we’ve grown accustomed to, and at times I catch myself among the unwilling.
But it’s far harder to attain those things today than it was 40 years ago. My parents bought their house in the 1980’s for $98,000, buckled down and paid it off in 10 years. That’s nearly impossible in 2017. Instead, our houses cost more, high rental prices make it difficult to save for a down payment, and our education costs more despite being worth less. On top of that, the looming shift to automation looks to be bringing with it a jobs crisis that has the potential to usher in the kind of hard times that originally set this cycle of entitlement in motion.
So while it may be foolish to argue that the reason my generation doesn’t own our homes is because we eat too much avocado toast, the toast represents the standard of living we’ve come to expect. Many of us are going to have to adjust those expectations before they’re adjusted for us, and we’re not thrilled about it.