You’ll own nothing (besides luxury goods) and be happy

There’s a silver lining to the astronomical cost of housing these days — if young people don’t pay rent, they can afford all sorts of nice things!

At least, that’s the take from Barclays’ Morgan Stanley’s* luxury analyst Edouard Aubin: more young people are living with their parents and spending less money on shelter and food.

In the US, the highest proportion of young people are living with their parents, since… uh… when’s that?

Oh, the Great Depression?! A famously luxurious time.

There are real vibe shifts happening in high-end retail, as Aubin points out. Luxury-goods consumers in the US (and the West more broadly) have got younger over the past five years, sparking a debate over how persistent that shift could be. Are degens buying lambos with now-closed infinite leverage loopholes? Or are young adults forgoing house-deposit dreams to scrape together cash for high-end sneakers, inspired by their favourite Instagram influencers?

Aubin argues for the latter scenario. From his note:

One of the key demographic trends in the US (and the broader Western market) has been the rising number of young adults living with their parents, driven by financial concerns (i.e. rental costs) as well as other sociological factors (eg higher penetration of higher education and increasingly delayed age for marriage).

As per US Census Bureau data, nearly half of young adults (defined as 18 to 29 years old) in the US are currently living with their parents, the highest on record since [chart above]. We believe that the trend benefits discretionary spending. When young adults free up their budget for daily necessities (e.g. rent and grocery), they simply have more disposable income to be allocated to discretionary spending. This is of course not the only reason luxury goods consumers are getting younger in the West (social media playing also an important part) but we see it as fundamentally positive for the industry.

With a decent chunk of a generation’s savings tied up on FTX, widespread tech layoffs, and fast-rising US rates, it shouldn’t be too long before we find out if he’s correct.

Correction: We incorrectly identified the name of the bank where Edouard Aubin works. Sorry!