October 28, 2016

What 'Peak Millennial' Means for Housing

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What 'Peak Millennial' Means for Housing

When NAR's 2016 Home Buyer and Seller Generational Trends study came out earlier this month, many were surprised to learn that the millennial generation, much like their parents, want to buy a single-family home in the suburbs. This contradicts the perception that most millennials prefer an urban lifestyle.

Read more: Millennials Are Heading to the ‘Burbs, After All

What this change in housing preference really shows, according to USC urban planning professor Dowell Myers, is that we have now reached 'Peak Millennial.'

As he pointed out to CityLab, "In 2015, those millennials born in 1990, the largest cohort born in any one year—turned 25." This age represents a turning point, where young people start thinking about their living and working situations in a different way, eventually leading them buy housing in the suburbs.

Lawrence Yun, NAR's chief economist confirms this age-shift in housing preference, saying, “The median age of a millennial home buyer is 30 years old, which typically is the time in life where one settles down to marry and raise a family."

With the largest millennial cohort growing up and possibly moving on to the suburbs, many urban areas that were reliant on the youth economy could see a decline in demand for certain types of housing geared towards young people.

To combat this population loss, urban cities will need to rethink the way that they approach housing and urban planning, in order to keep millennials from settling in the suburbs.

CityLab recently asked Myers what urban cities should do to offset the expected population dip, now that we have truly reached 'peak millennial.'

1. Gear city features towards families.

One way to keep this cohort in the city: make it easier for their lifestyle to evolve. Cities can focus on making improvements to the amenities that millennials with children want: accessible public transit, safe pedestrian-friendly neighborhoods, good schools, and affordable childcare. These investments will help soften the blow of the drop in population by keeping older millennials in cities.

2. Support new construction of all types.

As we all know by now, many booming urban cities are facing a housing affordability crisis. Buyers face a low-inventory, skyrocketing rent that makes it hard to even save for a down payment, and developers in many cities seem focused on building one-bedroom and studio housing options. If cities want to keep older millennials in the mix, they need to build housing of all types and sizes. There needs to be a focus on supporting a variety of construction efforts.

3. Expand what is already working.

Urban cities should keep investing in the attractions and features that made them appealing to young people in the first place. While the conveniences of suburbia will continue to be a draw for some, cities can improve what makes them special; their various cultural institutions, the walkable neighborhoods filled with restaurants and nightlife, and events that helps bring people from all walks of life together.

Source: "Have U.S. Cities Reached 'Peak Millennial'?," CityLab (March 16, 2016)