A list of items millennials may have affected begins with starter homes:
Statistically, the generation that coined the phrase “adulting” has put it off longer than previous generations (see marriage, kids, home ownership). According to Zillow, millennials are currently the largest group of homebuyers, but CEO Spencer Rascoff notes that “starter home” inventory is limited, forcing millennials to rent until they can afford the bigger, more expensive crop of houses. On the bright side, chances are their Pinterest and DIY skills have their rentals looking lovely.
Many of the underlying economic factors limiting the number of and access to starter homes is out of the hands of millennials. Additionally, Americans as a whole are conditioned and pushed purchase and live in larger homes.
Theoretically, millennials could push back more on the delayed adulthood that is now common – but that has its own confluence of factors pushing adults toward achieving adult milestones later.
In the long run, it appears millennials still want to buy homes and are interested in a suburban life. However, this might look different: the process will be pushed back, homeowners may own fewer homes, and the homes themselves could be larger and have specific features. There will still be many smaller homes in the United States but they may require a good amount of renovation, may be fairly pricey to acquire, and Baby Boomers may be in them for a while. The homeownership process does not have to look the same in the future and there might even be some positive twists along the way even as it can be difficult to move away from established patterns.
Chicago continues to be a draw for young adults:
According to U.S. Census population estimates, 73 percent of West Loop residents (6,800 people) are millennials. California-based apartment search website RENTCafe.com analyzed the data, ranking ZIP codes in the country’s 30 largest U.S. cities. And the West Loop — ZIP code 60661 — is home to a higher percentage of people born between 1977 and 1996 than any other in the country, according to their analysis.
But the trendy downtown-adjacent neighborhood doesn’t come close to several other Chicago areas in terms of sheer numbers. Lakeview, Logan Square, Irving Park, Lincoln Park, Chicago Lawn, Pilsen and Lincoln Square — each home to more than 30,000 millennials — all rank among the top 20 ZIP codes in the nation with the largest millennial population, according to RENTCafe.
While the emphasis in the rest of the article is on the excitement in such neighborhoods, I want to hold the data up to two larger trends.
These figures may suggest Chicago continues to draw young adults from throughout the Midwest. From an area roughly from Detroit to Omaha, Minneapolis to St. Louis, Chicago pulls in a lot of residents to the leading city in the middle of the country. This is happening even as the US population continues to shift to the South and West.
Furthermore, these high percentages of millennials may seem out of place considering Chicago’s population loss in recent years. On one hand, the city as a whole is struggling to retain residents. On the other hand, a good number of millennials want to move to and live in Chicago. The long-term trick may be for the city to figure how to keep these millennials in the city even as millennials on the whole might prefer the suburbs later in life.
Even with all of its issues, Chicago is still a desirable place to live, particularly for millennials. These neighborhoods with younger adults could prove very important to helping the city retain its status as a leading global city.
A recent analysis on Realtor.com uses the term McMansion as shorthand for a large house owned by a Baby Boomer. Here is the crux of the argument regarding the habits of millennials:
“They’ll buy a smaller house with fancier amenities, close to town, rather than chase square footage,” Dorsey says.
This argument has been made for several years now: millennials are willing to live in smaller homes but desire certain amenities. But, is every big house a McMansion? No, no, no – a minority of American homes are over 3,000 square feet but not all of them are McMansions. Even if they meet the size requirement, they may not be teardowns, suffer architecturally, or exist in lonely suburban communities or all house crass consumers or the nouveau riche. And do all Baby Boomers live in McMansions? Of course not. There may be broad patterns at play here – Baby Boomers have plenty of houses to sell, millennials may not want all of those particular homes – but using loaded terms like McMansions or suggesting incompatibility across entire generations may be going too far.
Side note: this Baby Boomers vs. millennials in the housing market is gaining steam across media sources. How will the Boomers sell all of their houses? (See earlier posts here and here.) What do millennials want in houses and communities? (See earlier posts here and here.)
The founder of the Tumblr McMansion Hell was asked about the effect of McMansions on younger generations:
Returning back to our earlier conversation about why your Tumblr seems to especially be popular among young people, it would seem that not only are young people rejecting their parents’ values but they’re also coming of age during a time that has other trends affecting the decline of McMansions. For instance people are choosing to remain in cities rather than move to suburbs, they’re prioritizing the quality of possessions versus the quantity, there’s a focus on minimalism and everyone’s obsessed with Marie Kondo and de-cluttering. What do you think about all of this?
I think that what it really boils down to is the previous generation — the McMansion buyers — [placed an emphasis] on owning and having assets and this [younger] generation is now more interested in having experiences. Having the experience of community by living in the city, having the experience of having a house that’s well-crafted. This is also the first generation that really grew up with the concept of global warming and we have more of an urgency because our lives are going to be impacted by it. For a lot of young people that grew up in the suburbs, once you reached adolescence, there was a quality of life that was really impacted by the isolation of the suburbs and I think that has played a huge role as to why the younger generation is rejecting this notion of ‘the big house’ and this notion of always being in the car.
There are a number of broad assumptions made here on both sides – interviewer and interviewee – and how they may be affected by McMansions. It is still not entirely clear that younger Americans don’t want to own homes in the suburbs or that consumerism has abated. Younger Americans do seem to have less interest in driving – as evidenced by delayed drivers licenses – though McMansions aren’t only located in exurbs. Some of this will take time to sort out as there have also been large scale economic events that have had some effect.
Among those who discuss McMansions, you would be hard pressed to find many who would argue McMansions are good for children. The opinion above is that children who grew up in such homes will react in certain ways to their negative effects. Yet, how many people reject the general values and norms of their parents? Americans often celebrate this ideal – teenagers should have room to explore, adults should be able to make their own choices and be their own person – but there is often more continuity in society than we suspect. Social change can indeed take place across generations but not all of life necessarily changes.
I can see it now: let’s replace the term Millennials with the McMansion generation. While most people didn’t grow up in such homes, it would fit certain narratives…
Experts suggest the inaction of Baby Boomers is adding to a slow real estate market:
Boomers are part of a “clogging up [of] the whole chain of home sales,” Sean Becketti, chief economist of giant mortgage investor Freddie Mac, told me last week.
“They appear to be staying in the family home longer than previous generations,” Becketti wrote in a new outlook report, “and the imbalance between housing demand and supply continues to boost prices.”
Of course, boomers’ behavior has had outsize effects on the national economy for decades. In real estate, their footprint is enormous. Becketti cites the Federal Reserve’s most recent Survey of Consumer Finances, which estimated in 2013 that households led by people age 55 and older controlled two-thirds of all home equity. One federal estimate puts the aggregate value of their houses at close to $8 trillion.
In past generations, once the kids moved out, empty nesters began to downsize, either purchasing smaller houses or renting apartments. Boomers don’t seem to be in a rush to do either.
While bigger and more expensive housing is moving more quickly, it is at the lower end of the market – smaller and cheaper homes – that needs help. Where are the starter homes for younger adults? It could be a combination of developers focusing on homes with higher profit margins, millennials waiting longer to purchase homes, and older residents staying put longer. This not only affects different age groups; it also has an overall impact on the supply of affordable housing for anyone which is lacking in many major metropolitan regions.
So what kind of incentives would convince Baby Boomers to move?
Joel Kotkin discusses the demographic data that shows the bulk of millenials are near their 30s – and possible lives in the suburbs.
Some of this simply reflects the aging of millennials. As Jed Kolko at the real estate website Trulia has pointed out, the proclivity for urban living peaks in the mid-to-late 20s and drops notably later. Over 25 percent of people in their midtwenties, he found, live in urban neighborhoods; but by the time they move into their midthirties, it drops to no more than18 percent.
The impact of the aging process – the maturation, however delayed, upon millennials – will soon become acutely obvious to all but the most emotional retro-urbanist. In 2018, according to Census Bureau estimates, the number of millennials entering their 30s will be larger than those in their 20s, and the trend will only get stronger, with the numbers tilting ever more in favor of the thirtysomethings. Kolko suggests that we may already have passed “peak urban millennial.”
And then Kotkin goes on to try to bust other stereotypes about millennials. Both he and the other side – such as those who tend to argue that smart growth will inevitable win out behind the tastes of younger Americans – can cite some data and make some predictions. Perhaps Kotkin has the easier selection: he suggests millennials will follow the geographic inertia of their ancestors (even if they do have some other social differences) while his opponents are looking for a big break from the past.
But, it is interesting to note that we may only be a few years away from settling this debate if the bulk of millennials are then in their thirties. Unless emerging adulthood keeps getting extended for this group, they will be expected to have made their “adult” decisions soon. Will they choose cities and denser suburbs or will they continue to prefer more space relatively far from dense population concentrations?
Perhaps that generational shift back to the city will take some time: a new survey shows a majority of millennials would prefer to live in suburbs.
Some demographers and economists argue that the preference of millennials, also called Generation Y, for city living will remain long lasting. And surveys of these young urban residents have tended to show that they don’t mind small living quarters as long as they have access to mass transit and are close to entertainment, dining and their workplaces.
But a survey released Wednesday by the National Association of Home Builders, a trade group, suggested otherwise. The survey, based on responses from 1,506 people born since 1977, found that most want to live in single-family homes outside of the urban center, even if they now reside in the city…
The survey, which was released at the association’s convention in Las Vegas, found that 66% want to live in the suburbs, 24% want to live in rural areas and 10% want to live in a city center. One of the main reasons people want to relocate from the city center, she said, is that they “want to live in more space than they have now.” The survey showed 81% want three or more bedrooms in their home…
The survey results, though, could be skewed because they included only millennials who first answered that they bought a home within the past three years or intended to do so in the next three years. That excluded young people who intend to rent for many more years, which is a large and growing group, in part because of hefty student debt and the tight mortgage-lending standards of recent years.
Interesting twist there at the end – of those who have or intend to buy homes, the suburbs are still the place (and only 10% wanted to live in a city center) to go.
I do wonder at the three categories presented: city center, suburbs, and rural areas. While the last one is pretty easy to define, what is the boundary between the city center and suburbs? If I’m thinking about Chicago, does living in the city center include every part of the city of Chicago (which has a lot of neighborhoods of single-family homes) or does it refer to living in the denser Loop and right nearby?