MARKET BREAKDOWN
CITIES VS. SUBURBS
IN 2016:
35% MILLENNIALS PURCHASED OF HOMES SOLD IN THE U.S. 31 AVERAGE AGE OF FIRST-TIME HOME BUYER WAS AVERAGE AGE OF MILLENNIALS WAS 25
• SOMERVILLE, MASSACHUSETTS , OUTSIDE OF BOSTON • ARLINGTON, VIRGINIA , OUTSIDE OF WASHINGTON D.C. • ALEXANDRIA, VIRGINIA , OUTSIDE OF WASHINGTON D.C. • GAITHERSBURG, MARYLAND , OUTSIDE OF WASHINGTON, D.C. Those suburbs aren’t the suburbs of the baby boomer generation, however. Millennials are flocking to suburbs that have the livability factors they seek. • ATASCOCITA, TEXAS , OUTSIDE OF HOUSTON
If millennials are beginning to buy homes in large numbers and the suburbs make up half of all home purchases, then the “wisdom” that city living is what attracts millennials must be flawed. The truth is that affluent millennials living in coastal cities prefer urban centers. Most everyone else prefers the suburbs. One study shows that only 13 percent of millennials live in a downtown location, and they tend to live in one of 11 magnet downtowns. Just one- third of millennials identify as urban. The millennial generation is comprised of about 80 million people. Although there are the stereotypical “hipsters” who live in dense, big cities, it shouldn’t be surprising that not all 80 million members of this generation fit that description. The most recent census data shows older millennials, ages 25 to 34, tend to live in up-and-coming suburbs such as: SOWHERE ARE THEY LIVING NOW?
Commuter Suburbs: The NewAmerican Dream AS MILLENNIALS ENTER THEIR 30S, THEIR HOUSING PREFERENCES ARE CHANGING.
From these numbers, we see that over one-third of homes were purchased by millennials, and the majority of millennials haven’t even reached home-buying age yet. Understanding what they desire as they begin the buying process will be essential when determining how to invest. Other numbers worth considering include: • The majority (71 percent) of first-time buyers are Millennials. • The suburbs rule: 49 percent of buyers buy there, followed by 31 percent of buyers buying in urban locations and just 19 percent of American buyers purchasing in rural regions. • The suburban population is growing faster than its urban counterpart • Over 60 percent of cities showed a drop-off in growth during 2016
by John Trautman
he city or the suburbs? Which location does the largest rising block of home buyers prefer? In recent years, conventional wisdom would have steered real estate investors toward the urban centers thanks to the stated preferences of the Millennial generation, which has tended to prefer renting over owning, community space over square footage, and access to public transit over proximity to public schools. Millennials, T
the experts said, prefer to live downtown in the middle of all the action. However, as the millennials age, statistics appear to be telling a new story with a suburban ending. BREAKING DOWN THE MILLENNIAL MARKET NUMBERS Homeownership among millennials has certainly been lower than in
previous generations. However, it isn’t that this generation won’t ever buy a home; they’ve simply been delayed. With issues such as high student loan debt, a slow job market, rising real estate costs, and entering adulthood during a recession that lingered for years, millennials are a bit behind. However, last year’s numbers (see top of pg 57) indicate they may be catching up.
WHAT MILLENNIALS LOOK FOR
12,000 Millennials reach the age of 30 each day, drawing closer and closer to the “new normal” for buying a first home.
56 | think realty magazine :: year end 2017
thinkrealty . com | 57
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