December 5, 2017

Millennials are heading for the ’burbs

Millennials are heading for the ’burbs
Bay Equity | Corporate News

Decades ago, city dwellers had to weigh the high cost of “moving to the country” (AKA pulling up roots to head for more rural communities and longer commutes).

As cities pushed outward, and the automobile dominated American transit, the script flipped. Suburban development drew the working population to the country en masse.

In the developing suburbs, larger homes on larger lots brought the promise of better living, and made the longer commutes worthwhile. Meanwhile, downtowns either languished or were transformed into trendy havens for the wealthy.

A decade ago, many analysts wondered if the millennial generation—individuals born between 1981 and 1996—was bringing downtown dwelling back into vogue. They seemed satisfied to rent high-cost apartments and condos just to be close to the action … and their jobs.

But now, millennials are growing up and finding a lot in common with their grandparents. A 2016 survey by the National Association of Home Builders found 66 percent of those born after 1977 want to live in the suburbs, compared to 10 percent who want to live in a city.

By far the nation’s largest generation at 80 million strong, millennial buyers offer the housing market the potential for another boom. But supply has to catch up with demand.

More homes are expected to come on the market in the next few years, but it’s going to take some cooperation from other homeowners. Historically, when seniors downsize, move-up homes open up for middle-aged people.

Middle-aged people move out of starter homes to make way for their kids. But somehow that system has gotten a little stuck. Analysts say more people are choosing to stay where they are, which actually drives up prices in times of high demand.

The country’s homebuilders have also slipped behind demand. For the better part of two decades, they’ve mostly focused on multifamily complexes and larger, more luxurious homes for wealthier buyers.

Without a rich supply of starter homes, younger buyers seek out townhomes and other attached living situations when they can. If they can afford it, some even go straight for those aforementioned larger, pricier homes that are so prevalent in the new-construction market.

Still, millennials are buying homes. After a serious dropoff that started with the housing crash, census numbers say the national homeownership rate among younger adults is easing up gradually.

The National Association of Realtors says people younger than 36 have represented the largest share of homebuyers for the last four years, at about 34 percent.

Outlying smaller cities are taking notice, increasingly adding new “suburban centers” that feature apartments, condos and townhomes with trendy stores and fun restaurants. And these downtown-like amenities also serve to attract millennial buyers as they begin their lifelong transition to the suburban lifestyle.