Millennial Perceptions on Homeownership and Financial Planning Decisions

Abstract

This master’s thesis investigates the economic factors that are affecting the financial decision-making of educated, middle to upper class Millennials in Los Angeles, California. This thesis explores how economic factors, preferences, and self-efficacy interact to determine housing pathways. This thesis also asks whether Millennials in Los Angeles will be able to afford homes and how the cultural narrative of the American Dream affects preferences. In order to answer these questions, twenty in person interviews are conducted with residents of Los Angeles in which they are asked about their values and preferences regarding housing, and the economic factors they are currently facing. This thesis finds that participants are struggling to navigate through economic factors such as student loans, a changing labor market, urbanization, high cost of living, stagnating wages, and high housing prices. This thesis finds that participants are experiencing low self-efficacy when it comes to finances, which seems to be a proportional reaction to the current economic climate. This thesis also finds that most participants want to own homes, however, in reality very few will be able to afford to buy homes in Los Angeles and will have to rent indefinitely. Lastly, this thesis finds that participants are rejecting the old American dream and that their preferences and values are different from baby boomers', however the housing market has not yet evolved to meet the demand of those changing preferences.