Millennials Renting in Cities Attract a New Crop of Lenders
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What is the main topic discussed in this episode?
Here's your Money Briefing. I'm J.R. Whalen at The Wall Street Journal in New York.
What housing challenge are millennials facing in U.S. cities?
Millennials are getting priced out of the housing market in U.S. big cities, and they're turning to a new crop of lending services. But those services might be setting them off on the wrong financial foot. We'll have more on that in a moment. First, these money and market stories you should know. You've heard of FOMO, right?
How is social media and FOMO affecting millennials' spending habits?
F-O-M-O? The fear of missing out? Well, more than a third of Americans surveyed by Charles Schwab say their spending habits have been influenced by photos and stories shared by their friends on social media. And they confess they spend more than they can afford to shell out. in order to avoid missing out on the fun. In the survey, respondents placed blame on social media platforms and not people. In fact, they rank social media as the biggest bad influence when it comes to how they manage their money. Friends and family rank at the top of the list of good influences. And that pressure to spend and the desire to not be left out of friends' experiences is most pronounced among millennials and Generation Z, which is people born from roughly 1995 to 2005.
And salary transparency might seem to be an ideal way to detect and rectify pay discrepancies at work, especially between men and women. But new research from Canada reveals a different result. Economists from the University of Toronto, Princeton University, and Canada's National Statistics Agency studied public sector salary disclosure laws and specifically how they impacted university faculty, throughout Canada since 1970. And what they found is that by revealing salary data, the gender pay gap shrank because employers were encouraged to pay females more money. That's the good news. The not-so-good news is that over time, salaries offered to both men and women declined. So while the gender gap shrank, workers went home with less money.
Another finding of the report, the gender pay gap shrank the most at unionized universities.
As more millennials are priced out of living in cities, a new crop of lenders has emerged to help them afford to rent.
What did Canadian research reveal about salary transparency and pay cuts?
But it could cause borrowers to bite off more money than they can chew. And Wall Street Journal housing reporter Will Parker is here with some details. So, Will, these lending companies are targeting renters recently out of college who are looking in some cases to build credit through renting.
Yeah, that's right.
What new lenders are offering loans to help millennials afford rent?
I think a lot of the people that this is attractive to are, you know, those who are recently out of college. Maybe they're taking a job in a new city, but they don't have a lot of cash. Maybe they have the promise of a job that's going to pay them eventually. But, you know, affording the first month rent, the last month rent, the deposit, they don't necessarily have that at the ready.
And the challenges that are facing millennials are common across many age groups, and that is rising housing costs and wages that are really only inching higher.
I think there's some concern, especially because of the amount of debt that, you know, this group of renters has taken on from school that, you know, an additional loan on top of that is really just going to strain what they're going to be able to do. But it's something that's arisen with, you know, certainly nothing else is coming in and providing relief with the unaffordability of housing.
And the cost of these loans is very competitive in some cases. They're kind of similar to payday loans.
Yeah. So, I mean, they're structured kind of similarly. The interest rates for most of the ones in the story are much lower. They're similar to what you would find with a credit card in some cases. But, you know, that still is a bit high. I mean, some credit counselors, for example, urge renters to not be taking on an extra loan at that interest rate, for example.
And it could cause some renters and some young borrowers in some cases to take on some bad habits and take on more costs than they can handle and kind of going over their heads.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:05–0:09
2
What housing challenge are millennials facing in U.S. cities?
0:09–0:27
3
How is social media and FOMO affecting millennials' spending habits?
0:27–2:18
4
What did Canadian research reveal about salary transparency and pay cuts?
2:18–2:34
5
What new lenders are offering loans to help millennials afford rent?
2:34–4:11
6
How do rent-focused loans compare to payday loans and credit cards?
4:11–5:22
7
Who uses these rent-lending services and what risks do borrowers face?
5:22–7:38
8
Are companies tightening standards or offering subscription alternatives for rent loans?
7:38–7:42
Speakers
2 identifiedMore from WSJ Your Money Briefing
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