Thursday, December 4, 2008

Millennials can also Fix the Housing Market

Many of the nation’s youth (and a few of their elders) are expecting a magical turnaround of America’s economic fortunes as soon as their candidate for President, Barack Obama, is sworn in on January 20th 2009. But the Millennial Generation, born between 1982 and 2003, may be more the source of the country’s economic salvation as any initiative the new President might propose.
Millennials are the largest generation in American history, more than 91 million strong. They are coming of age just in time to join the workforce, enter the housing market, stabilize home prices, and buy the nation's expanding inventory of durable goods to furnish their new homes. Despite being burdened with student loan debt and graduating just when the job market is shrinking, this group of optimistic, civic-minded young Americans is ready to demonstrate that it is not only capable of electing a President, but also helping to resolve the country's housing crisis.
The “helicopter parents” of Millennials constantly hovered over their children as they grew up in order to protect them from anything that might harm their self-esteem. As a result, many older American’s, especially the 27 to 43 year old members of Generation X, think the Millennial’s “can do” attitude will crumble once they are confronted by the “realities of the real world.”
But this ignores the cyclical nature of generational change. The GI Generation --- the Millennial’s civic generation’s great-grandparents who came of age in the 1930s and 1940s- were raised in much the same way and acquired many of the same values cherished by Millennials. These members of what have come to be called “the Greatest Generation” were able to draw upon a deep reservoir of confidence and determination to lead America’s recovery from the Depression and later win the struggle against both fascism and communism.
To give Millennial’s the same opportunity to rescue America, the new Obama administration should give the emerging generation the same attention in its policy initiatives that it gave expended on getting their votes. Certainly the opportunity is there, particularly in rescuing the now devastated housing market,
One unintended collateral benefit of the rapid drop in housing prices across the nation is to put many suburban homes within reach of first time home buyers, something that has not occurred for at least a decade. Even in pricey California, for example, the ratio between income and cost of housing has begun to drop dramatically, notes a recent paper by Chapman University graduate students Gil Yabes and Jason Goforth, with the ratio between income and mortgages dropping by one half or more in Orange, Riverside, and San Bernardino Counties, close to pre-bubble levels.
That’s a big opportunity, one that President-elect Obama’s “Home Ownership Initiative” should seize on. The Millennials could well be the demographic that could buy these more affordable homes and staunch the rise of foreclosures threatening the U.S. economy.
It’s not that these young people don’t want to own homes. A 2004 study of students enrolled in a four-year university, a community college and an historically black college found that about the same 40-percent plurality in each group preferred to live in a “suburban community, single family home,” upon graduation. The second choice of these Millennials was to live in a “rural area, with large lots and open space.” Only about a quarter wanted to live in an “urban setting with mixed housing styles.” Luckily for them, five years later, their preferred housing stock has just become imminently more affordable.
Now the Democratic Congress and President Obama should enact a significant tax credit incentive for first time home buyers, many of whom would be Millennials. By rapidly expanding the universe of potential home buyers, this program would help stabilize housing prices in the critical lower cost housing market. At the same time it would help stem foreclosures among existing home buyers, whose loss of home equity has made abandoning mortgages more rational economically than keeping up payments.
In 1934, during an earlier time of far greater economic pain, the Federal Housing Agency (FHA) was created to provide financing for a new type of mortgage requiring a lower down payment with the loan to be paid off over 25 or 30 years. The federal agency’s financing authority was greatly extended through Title II of the Housing Act of 1949, which provided federally guaranteed mortgage insurance and helped a flood of returning GI's own a home. Now it is time for Fannie Mae and Freddie Mac to be given the authority to finance a new mortgage structure for homebuyers under thirty.
By lowering down payment requirements for this select group of home buyers to 10% and stretching the terms of mortgages to the number of years these young people are likely to be active in the workforce, forty, monthly payments on starter homes could be brought in line with the Millennial’s ability to pay. Initially, this combination of tax credits and new types of mortgage financing would slow the decline in home prices that triggered the problems in the country's financial markets. In the longer run, it will make sure that the benefits of widespread homeownership will expand to a new generation of Americans.
One young Millennial to whom we talked recently was concerned that the hours her retail employer wanted her to work were being cut as holiday shopping continued to sour. She expressed concern that there was still “more than a month before Obama gets sworn in and everything turns around again.”
While her statement exhibits the kind of economic naivet̩ that frustrates some older Americans, it does provide an important lesson Рpolitical as well as economic - for the incoming administration. The Millennial Generation, whose votes were key in nominating and then resoundingly electing President Obama, want to see things improve rapidly. After all, they lack either the experience or the equity that Baby Boomers have acquired over the years.
Once in office, President Obama should embrace the impatience of America's youth as one way to insure that his economic policies are enacted quickly. By making an explicit appeal to America's largest generation’s desire for homeownership, he would not only take a big step toward ensuring the popularity of his economic program, but its effectiveness as well.
Morley Winograd and Michael D. Hais are fellows of NDN and the New Policy Institute and co-authors of Millennial Makeover: MySpace, YouTube, and the Future of American Politics (Rutgers University Press: 2008), named one of the New York Times 10 favorite books of 2008.

Monday, December 1, 2008

Cultivating Obama's Millennial Supporters

President-elect Obama’s remarkable showing among Millennial voters, ages 18-26, who supported him by a more than 2:1 margin was a direct byproduct of his unprecedented ability to utilize online communication tools to mobilize these core supporters to self-organize on behalf of the campaign and its voter turnout efforts. Now, like proud parents unsure of how to handle the success of a child who has just graduated, the candidate and the incoming administration must decide how to maintain their new offspring’s enthusiasm while ensuring that it channels their energies into the most productive activities. The answer to this challenge can be found by leveraging the spirit of service that is so much a part of the Millennial Generation and their ability to self-organize using social network technologies.
According to Harvard University’s Institute of Politics, almost 60 percent of Millennials are “personally interested in engaging in some form of public service to help the country.” This idea is strongly supported regardless of gender or party affiliation. While many of those surveyed thought of public service in the context of going to work for government or even running for office, there is no reason to channel the generation’s enthusiasm solely into these more politically oriented activities. Instead, President-elect Obama should create an entity that his administration can use to help Millennials find ways to rebuild all of America’s civic institutions.
Just as was not an ordinary political website, this “Sprit of Service,” social network should not be an attempt to replicate email lobbying efforts like That kind of activity can be turned over to an Obama friendly DNC which is already salivating at the prospect of inheriting the campaign’s estimated 13 million email addresses. Instead the site should provide direction to all its “friends” without attempting to assert control over their decisions. As Republican online campaign consultant Mike Turk pointed out to the relatively deaf ears of his party’s leadership last year, “What makes you successful online is not how many emails you can amass, but the quality of the people on the list. [Letting them interact] is the free pizza, Cokes and music with which you feed your volunteers.”
Already we have evidence that the Net savvy Obama operatives get this distinction. At the official website of the transition,, viewers are invited to join discussions on critical policy issues, such as health care reform, in the “hope it will allow you to form communities around these issues.” Millennials have enough energy and tech savvyness to run with this ball once it is handed to them. As members of a “civic” generation they believe their personal involvement will make government work again, reinforce the power of the Democratic Party, improve the education of their siblings, and help their local community manage through difficult times. What or its successor can provide them is information on how to get involved, a place to share ideas, and a chance to link to others with similar interests and energy.
The key will be to port this community-building online activity into the post-Inaugural world in a way which gives it a connection to the President without drowning it in bureaucratic rules or short term political priorities. Despite the ultimate benefit government will receive from the volunteer activities the site will generate, it cannot be housed inside of government—even as part of the official national service “Corps”—because of the perverse impact some of the provisions of the Paperwork Reduction Act and our Freedom of Information laws have on dealing with volunteers. Even though those who are attracted to the site are likely to become even more closely identified with the Democratic Party, it cannot be housed at the DNC which would inevitably succumb to the temptation to overly politicize the site. Instead a non-profit devoted to the cause of harnessing Millennial’s interest in civic engagement should establish the site with an advisory board of directors made up of “friends of Obama” and an operational staff drawn from the ranks of the online experts of his campaign. Properly funded, organized and structured, this “Spirit of Service” will enable Millennials to satisfy their desire to rebuild America’s civic institutions and restore our national pride.

Morley Winograd and Michael D. Hais are fellows of NDN and the New Policy Institute and co-authors of Millennial Makeover: MySpace, YouTube, and the Future of American Politics (Rutgers University Press: 2008), named one of the 10 best books of 2008 by the New York Times.