Millennials—those currently 19 to 34 years old (born 1981 to 1996)—have been a challenging demographic group for the home building industry to figure out. They’ve kept many wondering as to when and where they will finally decide to buy a home.
One major reason Millennials are acting differently has to do with finances. According to the New American Foundation, the average Millennial graduating with a bachelor’s degree has nearly $30k in student loans. This long-term burden of debt competes with other expenditures, and makes it harder to qualify for mortgages. Add fewer job opportunities (and job advances) to the mix and it’s not hard to understand why Millennials are living at home longer with parents, renting rather than buying, and putting off marriage and children. More than changing preferences—these are often sound financial choices. Eventually, Millennials will be buying homes, but they will do so at a lower rate than previous generations and on a delayed time schedule.
So when Millennials do finally decide to buy, where will they locate? Some say Millennials are looking for a more urban, “Seinfeld” like community atmosphere. Others argue that Millennials haven’t disregarded the typical American suburban lifestyle, but only postponed it. Soon they’ll be out mowing the front lawn and playing with Lassie and the kids in the back yard—just like their parents and grandparents.
Who’s right? In my opinion, both. Urban living has definitely become more attractive and prevalent among young people—particularly for singles. And this option is more accessible than ever. You no longer a need to move to NY or SF to find dense, walkable neighborhoods. Most large metropolitan areas have budding if not mature enclaves where urban life is on display. This option is often more expensive, and usually precludes entry-level home ownership. But we’re seeing that once Millennials become established they do decide to buy in these markets.
As for the suburbs, many large scale master planned communities are incorporating new-urbanist design principles, offering town centers, walk and bike paths, and creating interesting places where residents like to linger. These quasi-dense centers offer a taste of the urban lifestyle but also meet the desired requirements of young families, which includes home space, yard space, and good schools.
Who’s right? In my opinion, both. Urban living has definitely become more attractive and prevalent among young people—particularly for singles. And this option is more accessible than ever. You no longer a need to move to NY or SF to find dense, walkable neighborhoods. Most large metropolitan areas have budding if not mature enclaves where urban life is on display. This option is often more expensive, and usually precludes entry-level home ownership. But we’re seeing that once Millennials become established they do decide to buy in these markets.
As for the suburbs, many large scale master planned communities are incorporating new-urbanist design principles, offering town centers, walk and bike paths, and creating interesting places where residents like to linger. These quasi-dense centers offer a taste of the urban lifestyle but also meet the desired requirements of young families, which includes home space, yard space, and good schools.
About the Author: Kent Dussair founded CDS in 1971 for the purpose of providing professional market and economic research and consulting services. With over 50 years of professional experience, Kent continues to provide CDS with valuable insight into how and why local, regional, and national markets are driven.
RSS Feed