SIGNALS

Why Millennials Will Trigger a Boom in Home Theater Sales

Ken C. Pohlmann  |  Dec 19, 2017

Work with me here. I'll try my best to explain. The gist of it is this: Millennials are going to move out of cities and start buying home theaters. Lots of home theaters.

Demographics is the science of the statistical study of population groups. It gives you the ability to study and understand social changes based on birth, aging, death, and so on. On the other hand, Mark Twain wisely observed: "There are lies, damn lies, and statistics." Still, to some extent, demographics can be used for prognostication. It's far from an exact science, but it's probably better than tea leaves and crystal balls.

So here's my theory: Demographics are showing that Millennials are getting better jobs, getting married, having kids, looking at real estate and school districts, and moving out of cities and into the suburbs. They are trading their shared apartments for bigger places to live — in particular, homes with yards. Let's surmise a 3/2. That means a master bedroom, and bedroom for a nursery for the baby. And a spare bedroom, and maybe a decent-size living room. Hmm — how about a home theater with a big TV and surround sound. Or maybe a nice stereo with floor-standing speakers....

Millennials, that population group born between 1980 and 2000, were supposed to love cities. They were supposed to be poor. They were supposed to like living with their parents or in apartments with roommates. They were supposed to only be interested in trendy bars. They were supposed to hate cars and driving. They were supposed to only like phones and hate hi-fi. Those assumptions may not be true, now or in the future.

For starters, while they migrated to cities for many years, now they are leaving cities. The Millennial population, for example, in Boston and Los Angeles has fallen since 2015 and Millennial growth has slowed in places like New York, Chicago, and Washington D.C. This phenomenon actually has cities worried about how to retain this desirable population in their urban cores.

The problem is that the cost of real estate in cities is prohibitively expensive, and getting worse. Home prices are rising at double the rate of hourly wages. Millennials, especially the "older" ones, increasingly want a middle-class lifestyle, but cannot afford it in cities. Like generations before them, they are moving to the suburbs, and starting to buy homes there. This follows the historic norm. Today, Millennials comprise the largest group of home buyers, accounting for almost half of all purchase loans. Another data point: Millennials are expected to form 20 million new households by 2025.

Based on these numbers, the new thinking is that Millennials don't particularly love cities — they were just stranded there after the 2008 recession and a slow economic recovery. Poor job prospects and stagnant wages forced them into an urban life of apartments and roommates. Now, with low unemployment rates (but wages are still stagnant) they are gaining mobility. Instead of ride sharing, they are buying cars. And if you are getting older, have a decent job, and own a car, that means you can start dreaming about that house. You know — the house with a spare bedroom.

A final data point: There are 83 million Millennials.

Where's the nearest Best Buy?

COMMENTS
James.Seeds's picture
Submitted by James.Seeds on December 19, 2017 - 2:14pm

I hope the industry isn't counting on these Millennials to buy home theaters, the one's I've dealt with still live in their parents basements, can't afford a vehicle let alone a decent system unless it was handed down to them by a Gen Xer

drny's picture
Submitted by drny on December 19, 2017 - 2:21pm

I have three Millenial age sons (35, 33, 31). They would love to have a spare room just for a Home Theater, or at least make room in the living room.
Problem # 1 they still rent (though they are professionals). Problem # 2, two are in their second marriage with four kids each (one added by second marriage, and of course child support).
Ergo, no home theater any time soon.
However, the real problem with most Millennials is their expectation of electronics.
They want A/V that is portable, with content accessible on demand, inexpensive, interactive, and most importantly connected to their social network.
My hope is that past 50, they will come to their senses, treasure the value of a quality experience as it pertains to A/V.
My sons make due with 65" UHDTV's and a decent sound bar and bass module (if it can reach at down to at least 30hz, then it ain't a sub son).
The three of them suffered greatly, when five years ago I gave away my old (Klipsch reference speakers).
They all now promised to make room for my Def Tech STS Home Theater speakers.
In all honesty, Millennials are smart(for the most part), let's us old fogies (boomers) invite them to our home and allow them to be amazed and mesmerized in our own Home Theater. Just don't let their wives hear how much it cost.

ednaz's picture
Submitted by ednaz on December 19, 2017 - 2:58pm

I'm sure people who lament the poverty of millennials have forgotten all the people they went to high school with, and where those people lived at age 24. It was much more possible to find a 3 people to a bedroom dump in the 60s and 70s where one could escape the parents at a cost affordable at minimum wage. Minimum wage can't get you an apartment share in any major city these days.

I've seen the research, and know a lot of real estate professionals. Millennials are, after being so focused on living in the city, in the middle of the action, walk to dinner, etc, now married or in serious relationships, with a kid or two... and now looking in the 'burbs. (I think people have also forgotten that boomers, GenX, and GenY, all went through an urban phase - Boomers' phase originated the term "gentrification" - before heading for lawnmowers and carpools.)

So I think you're right. Kids have an immense impact on one's values, thoughts, and interests. Always have. Always will.

dnoonie's picture
Submitted by dnoonie on December 20, 2017 - 12:03am

The Millennials I work with are doing a bit of everything but are being priced out of the city.

House sharing near city, moving to a cheaper city near public transportation, moving back in with parent(s), moving out of parent(s).

Those without cars tend not to get one but a few are, these are the ones that started out in the city. Those with cars tend to get another car and tend to live with parents and commute to start with but some are getting rid of them. Most know someone with a car so they can get out of town every so often.

Some folks would forgo the HT simply because there's no time to enjoy it. You live poor in the city and have time but no money, or spend 2 to 3 hours a day commuting (public transport or driving takes about the same time).

Cheers,

FrakU's picture
Submitted by FrakU on December 21, 2017 - 10:45am

I find it rather jaw dropping to watch millennials habits when they are home from work and I have seen many. They kick back on the couch and whip out the phones. That's it! Most of the time they won't even change out of their work clothes until they're about to jump in the shower but until then the phone is in their faces. And while I am witness to this nightmare there is a big screen (50 inches or more) flanked by 2 tower speakers just collecting dust. They don't turn on the tv at all unless it is connected to Roku or Apple TV types of devices. You know - that substandard HD and UHD delivery systems. And even that doesn't matter because millennia's have zero interest in quality. They are only interested in what's new. They don't tweak settings so when you walk into their homes the tv is in "torch mode" and they think it awesome! But I digress.

I have no faith that millennia's will ever be interested in the quality of anything other than the next "smart" phone. We always see them camping out in front of Apple stores but they won't do that for an OLED display. Soon they will cost the same but they will drool for that new IPhone 16. $3599.99 if your interested.

One thing that could help significantly would be if speaker companies advertise! They should do it on tv, radio, and all over the internet at the same time. Bose does and those poor buyers think they have the greatest speakers in the world...

drny's picture
Submitted by drny on December 21, 2017 - 3:34pm

Al Griffin had the unenviable task of responding to a query by a young lady (millennial), regarding an A/V receiver that support DLNA video and music streaming.
Yes, that's right Ken.
A Millenials eager to purchase an A/V receiver that transmits crappy low end video signal.
Quality be damned, they want to check out the latest silly videos posted on youtube or silly links.
Yes, Millennials sitting back on the couch watching a jerky video picture on a 65". $3,000 UHDTV. No wait, they're not crazy.
A 40" Hisence for $300 will do.

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