For the third year in a row, Millennials purchased a greater share (35 percent) of homes across the U.S. than any other generation. And the vast majority purchased a single-family home in a suburban area, with the share of Millennials buying in an urban or central city area decreasing to 17 percent, down from 21 percent last year, according to the National Association of Realtors’ latest Generational Trends Report.
According to NAR’s Chief Economist, while the trend towards urban living has dominated the headlines over the past decade, with affordability issues making it difficult for younger households to buy a home in the city, “the need for more space at an affordable price” is now pushing the buyers out. And the cycle begins anew.
Interesting, given the supposed desire for urban living/experience though I guess the suggestion is the desire is there to live urban but not necessarily the means, at least when buying.
As a Gen-Xer I do think the desire to urban live existed for us too, but we were perhaps less bothered (or able given the somewhat pre digital era) to label ourselves as urban, “experiences not things” loving types.
Certainly the early to mid 90s housing prices helped us to achieve this, I was able to buy a 3 bedroom in a UK City for around $100k then without really breaking sweat or needing to work harder etc.
I actually think the housing market is part of the reason why the new generation seem more financially motivated and driven, you kind of have to be given the housing realities.
yeah, I read this data more as signs of affordability. Young people would buy in cities if they could, but the markets are so overpriced in major US cities these days that it’s impossible.
Atlantic did an interesting article about this. They concluded Pittsburgh and Minneapolis are the promised land of jobs that support housing for the youngsters
Young people wanting to have a family with two or more children would find it nearly impossible to find a suitable home in SF without an income well in to the six figures.
a family with 2 children, needing a 2bdrom, would need at least $400K income. a mere 6 figures would not get a decent 3 bdr
A 2-bdrm needs at least $400K income? You must have an extremely narrow scope of neighborhoods you’re looking at.
A median SF home might need $350K income, depending on your financing, but that’ll typically get you at least 3 bedrooms.
$350k a year, with childcare costs, etc., leaves you with less $1.5M of house (potentially much less). You are not getting 3 bedrooms for that.
The next housing boom will take off as the bubble within the millenias (22/23 year olds) reaches peak buying age on 30/31/32.
Why? births in hte US have remained ~4Mish for quite some time:
For all age groups suburbs had the most homes purchased because there are simply many more suburban homes available to buy than in either urban/central city, or small town, or rural, or resort/recreation; which are the other designations used in this report.
FWIW, the US Census gave up trying to define “suburban” years ago. They only do an urban/rural breakdown. NAR doesn’t explain how they determine their breakdown. But most breakdowns of central city vs suburbs show about 3 times as many owner-occupied housing units in the suburbs, while rentals are more equal.
By most definitions, “millenials” are born from 1980 until about 10 years ago, so many of these buyers are in their 30’s. Is anyone surprised that as Americans age from their 20s into their 30s they would increasingly tend to buy SFH in the “suburbs”? Kind of a well-established multi-generational pattern.
IMO, about half of the owner occupied housing in the City and County of SF should be classified as “suburbs” and not “central city,” but everyone is free to define these terms as they please, as they are unbound otherwise.
Hmmm… wonder if I live in the suburbs (would a $ per sq.ft. metric work for the urban/suburban divide).
Looking forward to your Square analysis. It seems that they have the volume to make the Change Bank model work.
millenial generation (or Y) started in 1977, so the beginning of this generation is now 39.
The definition varies. I’ve heard it is 18 – 34 year olds. I think 39 is definitely not part of that generation. BTW they number about 74.9 million and last year passed baby boomers in total numbers.
wikipedia says gen x stopped in 76 and gen y (or millenials) started in 77. Gen Z is now 19 at the top so millenials are 20-39
It does? From Wiki: “There are no precise dates for when the generation starts and ends; most researchers and commentators use birth years ranging from the early 1980s to the early 2000s.”
No, wikipedia indicates that while there is no universally accepted definition, every definition that anyone’s put forth says gen x stopped somewhere between 1981 and 1984. As to Millenials, it says that “most researchers and commentators use birth years ranging from the early 1980s to the early 2000s.”
The primary reasons are:
1- most Americans in general still live in burbs
2- urban cities (un)affordability
3- they are at prime child bearing age
Simple
To me, trends are more important than snapshots. It’s pretty well-documented Millennials prefer the urban context over the suburbs in comparison with the Gen Xers and certainly with the Boomers. That fact that the “favorite” central cities are so much more expensive than their suburbs are also part of this trend-picture: the rising costs of urban living both underscores a Millennial demand Boomers just didn’t impose, and also explain the one-year decline from 21% to 17% in purchasing by Millennials who, like everyone else, can’t keep up with these skyrocketing city-living costs.
The trend for millennials is to buy homes in the suburbs very much like previous generations. Notice the title of the report: “Generational Trends Report.” Most cities don’t have “skyrocketing costs.” The Case-Shiller 20-City Composite Home Price is about the same as it was in 2003 inflation adjusted. And back in 2003 mortgage interest rates were around 6%. Here is what it says in the intro of this report:
“One consistent finding for the last three years of reports has been that Generation Y/Millennials (buyers 18 to 35) is the largest share of home buyers at 35 percent. The share has consistently grown over the four years of reports. The largest cohort in America is growing up, and while Gen Y ages they become more traditional in their buying habits. This year’s report saw an increased share who purchased in suburban locations and who purchased detached single-family homes. Forty-five percent of Gen Y buyers now have children under the age of 18 in their home, 64 percent are married couples, and 12 percent are unmarried couples (the largest share of all generations).”
Millenials buy in the suburbs for the same reasons as every generation has since we built the suburbs: balance of value and family and drive to work. And that’s where ~half the houses are too.
It could be that the previous trend change towards urban living was over-hyped and over-reported. All young generations are drawn towards cities and all young generations feel as if they are the portents of change. Then all generations get older, have kids and look at issues such as schools, crime and clean streets with different eyes then when they were younger.
Maybe the boom/bubble times of recent memory increased the mobility of the young and the rise of social media skewed the content of reporting making a trend out of a molehill.
Anecdotal, but I’ve had more than a few friends’ attitudes go from “Awesome, this is so edgy!” to “Ewww, this is just gross”.
Just because more Millennials are buying in the suburbs, doesn’t mean more Millennials **want** to be buying in the suburbs.
That’s just where most of the affordable homes happen to be located.
The Atlantic piece referenced above ( http://www.theatlantic.com/business/archive/2015/01/young-americans-yearning-for-the-suburbs-stuck-in-the-city/384752/ ) has some data pointing towards the opposite conclusion. That more Millennials would want to buy a suburban home, but find that the jobs are in the cities.
” In the summer of 2013, the Demand Institute, a nonprofit think tank, posed a similar question to about 1,000 Millennials, aged 18 to 29. Nearly half said they’d like to have their next home be in the suburbs, while 38 percent preferred cities.”
And keep in mind that this age group is still young. Their preferences are bound to change as they age.
“That’s just where most of the affordable homes happen to be located.”
If you change “suburb” to “exurb” I’d agree. But here in the central Bay Area suburban homes aren’t cheaper than in the city. You just get a lot more (sq.ft., parcel size, schools) for your money.
i dont see any difference between gen X and millenials in where they want to live. Im an early genxer, and every one of my friends want to live in the city until their 30s, and 3/4 wanted to live in suburbs after their 1st kid reached ~ age 3.
millenials want to live in cities because they are young, just like every generation before them.
30 year old millennial here who bought my first house last year and chose a suburban town. Not because I couldn’t afford an urban center but I wanted peace and quiet without having to sacrifice urban amenities. Suburbia will never die because of that sweet combo and I’ve never been happier after spending the last 10 years living in downtowns across the US.
But I say, ol chap, don’t you find suburban life a tad too boring?