Multiple Roommates - The Only Millennial Moveout Strategy Left

At least you can food steal from your friends AND have an alibi

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What do you remember about the day you moved out for the first time? How did your story go? Were you one half of the excited young couple ready to start their life together in a new place? Were you shacking up on campus 100 miles away? Maybe that campus was a townhouse? Maybe that 100 miles was an ocean?

Moving out was and still is a huge deal, and for many young adults it's one of those first big milestones you hit in your life. You are now independent enough that you can go out on your own and take on the world. You don't have to look too far to find people who will be willing to tell you about how they set out on their life's adventure by buying a modest home for just themselves on a standard 40 hour salary job. Many still will be able to confirm that they were later able to support themselves, their spouse, and their children on that same salary.

Times have certainly changed, and so have the stories. You really can't find too many people under the age of 35 who can claim they share that same path. Almost always, that moveout will now come with the tagline of "I'm roommates with...", be it a person they know or a complete stranger. Increasingly, that tagline now involves more than one person. Yes, it's still possible to find people who have made it work with a single roommate, but more often you'll find groups of three to five popping up. Even more increasingly common is the concept of the "Gamer House" where you have a large number of people living under the same roof. Situations like this would likely be impossible (or at least extremely unusual) to find 50 years ago, but as the waves of Millennials begin to exit their parent's homes, the concept of having multiple roommates is not just a single option, it's the only option. For many, it's not the preferred means of achieving a moveout, but it's what's there.

So why are there seemingly no other options available to Millennials? What are the implications for the housing industry (and beyond) with a multiple roommate living model adapted en-masse? And is there any way to remedy the situation and create more opportunities for prospective movers?

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Divide and conquer

To see why we only have one option, it's easiest to work our way down the table of all the options and knock things off as we get to them. First, let's start by smashing a big one right out of the gate...

BUYING A HOME

Often times, we consider buying a home to be an option that only a single person would do or a person who is married would do (and subsequently you would think they move in together and figure things out from there). When I say single here, I don't mean relationship status either, I mean quite literally one person. The chances of you going in on a home purchase with someone you are not planning to be in a very long term relationship with is low. The chances of that individual being able to independently afford the mortgage payments (as well as the down payment) on top of all the additional costs such as property tax, utilities, and the "Oh this part of my house broke" payments that inevitably happen is even lower. That's even before we consider the fact that the housing market has gone crazy in the last year or so. The only way around it is by getting financial assistance from the parents or family, but that's not extremely common and it certainly isn't a moveout option millennials will consistently have in their back pocket. Multiple roommates and home ownership just don't really mix unless those roommates are your family.

So we've established that rental is the way to go for millennial movers. Let's further narrow in on...

RENTING SOLO

Alright, this one is a little more doable than the purchasing option. You could be forgiven for believing that there is a good amount of probability this option would work, but at the end of the day the whole "Solo" moveout concept went the way of the borderline impossible about five years ago. Rent, like everything else these days, is in high demand and very expensive compared to what it once was. Listings for small studio apartments in urban centers can gouge you for up to $3000+ per month with alarming consistency. Even if we drop the approximate price by half of that, $1500 per month is still no small amount. It's generally accepted as best practice that you target your rental expenses to 30% of your income. I did the math for you... at $1500 per month for rent, the individual renter will need to earn $60,000 per year. At the conventional moveout age (Millennials and Gen Z both apply here), people are not making $60,000 per year. That amount of money can take years to get to for an annual salary, and it certainly isn't achievable for those working hourly without handling several jobs at once. Millennials and Gen Z are priced out of the solo move option completely unless they want to move to some of the roughest neighborhoods, but those are exactly the places you may want a second person around watching your back.

Alright fine, but you mentioned multiple roommates. How about this one...

RENTING AS A DUO

This has been done recently in many places and was considered the go-to for a lot of people over the last 5-10 years. For those who were willing to trade their privacy and alone time, they could chop the rent in half! Multiple roommates were not quite necessary back in the day, but the one person made a difference. Yes, that should theoretically get us closer to that 30% mark if not under it in certain places, but let's pile extra stuff on the other side of the scale now.

Student Loan Payments

Car Payments

Grocery Bills

Insurance

Gas

It was all stuff that had to be covered 5-10 years ago, but the price of a lot of these items I listed has increased by a wide margin (some have almost doubled) since then. You know what hasn't likely doubled? The salary of those renting. Besides, if you're already giving up your space, may as well lean into it.

And there you go. The only millennial moveout option...

RENT WITH MULTIPLE ROOMMATES

Of course, there's always the option of "Don't move out", but that's not a moveout option because... well... you're not moving out.

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Sharing is caring

The housing market will always offer everything it can. Millennial moveouts only account for a fraction of the amount of property that exchanges hands in a given year, and there are plenty of people who are in the market for and able to purchase full scale houses, large multi-acre land plots, and penthouse suites. That being said, tapping into the millennial market means adapting to what they can afford, and that means planning listings around the multiple roommate reality. You can expect to see the number of listings that proudly boast high capacity limits, multiple bathrooms, and generous parking start to grow as Gen Z begins to enter the market as well. I would also anticipate the popularity of the large mansion-esque style house to start to decline as condensed living on a budget becomes further normalized. That being said, a savvy rental company will likely anticipate the shift and adjust the prices (upward) to account for the fact that multiple roommates means multiple income streams. "They're splitting costs, so they can also split the rent increase" will be the attitude that will soon get adopted. This will, ironically enough, make the situation faced by millennial and Gen Z movers worse.

A multiple roommate living situation also has implications for the workplace as well. Post-Covid times sees many companies and industries having adopted a hybrid working model. Outside of the retail and service industry (and particularly in any industry that boasts an office setting), working from home has become a part of the discussion. So what happens when that millennial's office is a shared workspace with their multiple roommates who are also working from home? Is it a possibility in the future that, should work from home become truly normalized, your roommates also become your office mates? What would that look like? It's uncharted territory.

Similar in scope to that, how does working remote while carrying multiple roommates factor in? In 2022, you can have a business based in one side of the country and employ someone who lives on the other side of that same country. You could go years without ever physically meeting them, and they could go years without visiting the office. By taking on this individual, you would also be taking on their home office environment and working conditions, and that means that you now have a package deal on your hands. Millennial workers are accustomed to working in these environments, but are businesses prepared to handle the multiple roommate factor that comes with that individual? Does the business have a vested interest in breaking that individual out of that living model? What role does the business play in that situation? As mentioned above, it's uncharted territory.

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Moving along

In order to begin clawing our way back to seeing millennial and Gen Z movers having less reliance on one another for making ends meet when it comes to rent, we need to figure out what needs to change. Unfortunately, change doesn't happen overnight and will (at least in this situation) go against where the market is currently trending. Ultimately, the multiple roommate living model is a result of one thing...

Money.

Any solution that we think of that deals with putting millennial movers back into a position where they can choose their strategy will inevitably have to touch this at some point. This can be achieved in either of two ways...

Putting more money in the hands of the millennials

Easier said than done. Getting more money and more purchasing power to millennials will represent either a substantial raise being given out or a job change as a result of potential job hopping efforts. As I touched on before, if a business wants to have an interest in shaping the environment their workers exist within, what is the responsibility they must take on in that process? Is it worth paying more to secure a certain type of employee work environment? I feel I can speak for a lot of people when I say that anyone wanting to give me more money is a welcome person in my life.

The extra revenue can give the option of having other living arrangements besides going paycheck to paycheck while relying on the multiple roommates you carry to also hold up their end of the bargain when it comes to splitting rent. It opens up the chances to at least consider small homes or townhouses, and the idea of the down payment starts to creep into view. This represents the better of the two options available and has the most long term benefit as far as sustainability and housing industry health.

Reducing the costs of rent and purchasing

There, I said it. Putting more money in the hands of prospective millennial movers is better than reducing the costs of housing as they stand now. Why? Because it...

Provides benefits beyond the housing market to give money to buyers

Does not actively punish those already in the market

Reduces the housing market volatility

Here's the thing... just because the costs of housing and rent aren't decreasing doesn't mean they need to continue their insane upward death spiral either. The housing market has inflated drastically in recent years and has outpaced the rest of the markets. Allowing the purchasing power of millennial movers to catch up can only benefit both sides of the equation. It also mitigates the power of real estate investment companies that seek to acquire property and sell it back at scale. Would I complain if rental and home purchasing costs came down? No, I'm not a psycho, I would be thrilled. However, the benefits in the long term of having more spending power and a market that slows to allow that purchasing power to catch up are much higher.

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Multiple Choices, not multiple roommates

Generations are easily defined by what makes them different. It allows us to draw lines between them and see the comparisons, and it lets us to visualize how things change over time. For millennials, one of those differences is that they are unlike the generations before that were able to move out at a very young age and support themselves in their own house. The multiple roommate model for a moveout is a characteristic of the millennial by way of no other option, and unless we change course in the coming years, Gen Z will be facing down the same reality.

As we continue to see workplaces diversity in their business models, we could see the increase in the amount of people calling their home their office as well. What does that look like and what role will roommates play in that decision? Increasing millennial buying power can help to put the brakes on long enough to find those answers. At the end of the day, it's about creating choices for millennial and future Gen Z movers to find what options suite them best. There will absolutely still be a market for multiple roommate living and cost splitting, but there are also many interested in the several alternatives out there that are, at this time, out of reach. It's an up-and-coming issue that can't be ignored, and we need to focus on the issues around moving in before we can celebrate moving on.

~IR

How did your first moveout experience go? Are you living with multiple roommates? Or maybe you just have a comment to add? Check out the Facebook, Twitter, Instagram, or LinkedIn page and let everyone know. Don't forget to follow or like the page for updates! And share this article if you feel others should give it a read!

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