Looking for stories of millennials and young adults who want to and enjoy living in suburban homes

The suburbs are indeed changing – such is the premise of Curbed‘s “The Suburbs Issue.” And the lead story seems to fit into this argument: the suburbs are changing in that millennials are not so sure about buying a large suburban home. Here is the conclusion from that story:

Scocca concludes that the dream of having a big house built just for you was “never a very good dream anyway,” and that might be true, and maybe it’s not even a revelation. Houses have always been a location where we can project our hopes, dreams, and fears. No matter how much we try to rationalize the process of owning a house, the relationship is always a bit foggy, tinted by human emotion. It doesn’t seem possible to live somewhere for any meaningful length of time without imbuing it with your own nebulous ego. Over the past few months, I kept returning to this quote from novelist Helen Oyeyemi: “I think that houses, or at least the home part of them, are so much constructed that they’re simultaneously magical and haunted anyway.” Houses are not homes, and homes are not necessarily houses. Perhaps the real American dream is to find a sense of stability, safety, and acceptance. Maybe this is a downsized version of our parents’ American dream, or perhaps it’s just more honest, taking into account all the different stories we’re fed from the outside, and all the private stories we tell ourselves behind closed doors.

There is much truth here: homeownership in the suburbs is not such an obvious path for many young Americans due to financial insecurity, watching what happened to older generations, and different priorities about what they want to get out of life. Just because Americans prioritized suburban homeownership in the last one hundred years (and propped it up through policies and cultural ideology) does not necessarily mean this will continue in the future.

At the same time, is an article like this in a long line of suburban critiques that now stretch back roughly a century? Some of the same concerns are present: what makes a home (the happy suburban facade or the difficulties many people still face even when it looks like they have the American Dream), whether the suburbs are financially possible (beyond just homes, driving is expensive and giving children all sorts of advantages is encouraged), environmental effects (using more land, driving, building individual homes), and a lack of excitement or vibrant community in the suburbs.

All of this leads me to wondering about the millennials who are still moving to suburbs by their choice. Surely they exist. Surveys suggest many millennials want to own a home in the suburbs at some point. The homeownership rate recently increased, driven by millennial’s purchases. The population of millennials in big cities recently declined. Empirical data could settle whether millennials are not settling in the suburbs at the same rate as previous generations or might be doing so at a delayed rate (which would fit with other findings regarding emerging adulthood).

Is finding these suburban millennials not a priority because it reinforces the suburban ideology? If millennials do largely settle in suburbs, would this be viewed as a failure of American society on multiple levels? Would settling in denser suburban areas be enough to make amends for decades of urban sprawl and “the ghastly tragedy of the suburbs“? Or, might slight changes among millennials be an acknowledgement that reversing long-standing narratives about the good life – the American Dream – could take decades (just as it took time to develop suburbia as the ideal on a mass scale)? What if, in the end, Americans like suburbs for multiple reasons?

Mismatch between the slightly smaller homes millennials want and bigger homes builders want to construct?

Some data from recent years suggests builders and younger homebuyers may not see eye-to-eye on what kinds of homes they want:

A new survey from the National Association of Home Builders suggests that millennials — the demographic that should be the big driver of home buying over the next decade — is growing increasingly pragmatic about size. In 2018, one-third of millennials said they would trade smaller size for greater affordability; in 2007 just one in five millennials found that tradeoff palatable.

Indeed, in its most recent annual report, Harvard’s Joint Center for Housing Studies notes the builder vs. buyer mismatch. “With millions of millennials moving into their prime home-buying years, demand for smaller, more affordable homes seems poised for a surge,” the report stated.

Yet builders aren’t interested in ponying up the supply.

The JCHS says that in 2017 small homes represented just 22% of new homes, compared to an average of 32% between 1999 and 2011. And to be clear, the JCHS is not talking about tiny homes for millennials. It defines small as 1,800 square feet or less. That is still bigger than new homes’ median size a generation ago.

Just how much smaller are the homes that millennials desire? The median new home size decreased last year to around 2,300 square feet. What exactly is the range of home size millennials most desire (and how does this size interact with other important factors such as locations or features of the home)?

On the other side, builders are likely interested in constructing larger homes because they can make more money off each unit. Additionally, there is still some demand for larger homes though this could change in the coming years with more millennials in the housing market alongside older residents who are no longer buying homes or who are looking to sell their own large homes.

All of this is of interest to the housing industry (and other related observers): will millennials kill McMansions? Where are the newly constructed starter houses? On the whole, Americans still have large homes on a global scale and an intertwined set of social and cultural factors that keep that going. There is both money to be made here and new dwellings younger homebuyers would like to explore (if they can afford them).

Competing claims: America has a shortage of housing versus it has plenty of housing (albeit overpriced or inaccessible)

Does the United States have lots of housing units or a shortage? The two sides of the argument:

  1. A few years ago, I had a conversation with a sociologist who studies housing. When I brought up the issue of not enough housing units in connection with a need for more affordable housing, they said the problem was not a lack of units. Rather, more of those units needed to be made available to the people who for a variety of reasons could not easily access them now.
  2. A recent opinion piece states the other side of the argument:

“Stephen, you’ve been proven right on housing, and I think you’re about to be proven even more right. The most important driver of home prices is supply and demand. And right now, there is a chronic undersupply of homes in America.

As I said, the 2008 bust turned a lot of folks off from investing in housing. It shattered the confidence of homebuilders, too. Census Bureau data shows an average of 1.5 million homes were built each year since 1959. Yet since 2009, just 900,000 homes have been built per year. In fact, fewer homes were built in the past decade than in any decade since the ‘50s!

We have a serious housing shortage in America today. It would take less than six months to sell every existing home on the market, as you can see here…

…In the past year or two, the first wave of young homebuyers came into the market. But every year for the next decade, tens of millions of Millennials will hit home-buying age.”

I could see a possibility where both prognosticators could be true: there are many dilapidated or older units that need to be updated and priced in ways that more people can access them and there is a relatively shortage of new homes that meet the demands and tastes of younger buyers.

But, this gets at some bigger questions about housing in the United States:

  1. How many older housing units can be renovated to today’s codes and standards? And who should pay for this?
  2. Should anyone be put in charge of or help set housing prices so that more housing units are within economic reach of more residents?
  3. Should developers and builders primarily focus on profit or do they also have a responsibility to communities (beyond paying a fee for affordable  housing or sprinkling in a few cheaper units)?
  4. Can housing be revitalized in areas without significantly changing the population composition or housing values or other ways that might significantly disrupt what current residents like about the location?

Maybe modernist houses will appeal to millennials – in certain circumstances

Architects and cultural critics often like modernist homes even as Americans largely do not prefer them. But, perhaps millennials will select modernist homes:

“For a while people were just tearing them down, but people are seeking them out now — they’re the anti-McMansion,” says Ellen Hilburg, co-founder of the real estate resource Mid Century Modern Hudson Valley. “For some people, it’s a nostalgia factor. But Millennials are discovering them, too. It’s an aesthetic that appeals to people who are aware and environmentally conscious.”

There are a number of pieces of this story that suggest preferences for modernist homes are tied to particular traits of the homeowner or observer:

1. A higher social class.

2. Higher levels of education.

3. Rejection of consumerism and the implied materialism and conformity that goes with it.

4. An interest in the “cool” factor of a home.

5. Living in a community – such as a wealthy, middle to upper-class suburb – where modernist homes are present and accepted.

Putting these categories together, there may indeed be a slice of Americans who prefer modernist homes. But, this also sounds like a taste connected to cultural capital, to invoke Bourdieu. In other words, expressing a preference for modernist design is connected to social class and education that not all Americans have access to.

17% of millennial homebuyers regret the purchase (but perhaps 83% do not??)

A recent headline: “17% of young homebuyers regret their purchase, Zillow survey shows.” And two opening paragraphs:

Seventeen percent of millennial and Generation Z homebuyers from ages 18-34  regret purchasing a home instead of renting, according to a Zillow survey.

Speculating as to why, Josh Lehr, industry development at Zillow-owned Mortech, said getting the wrong mortgage may have driven that disappointment. For example, the Zillow survey showed 22% of young buyers had regrets about their type of mortgage and 27-30% said their rates and payments are too high.

The rest of the short article then goes on to talk about the difficulties millennials might face in going through the mortgage process. Indeed, it seems consumer generally dislike obtaining a mortgage.

But, the headline is an odd one. Why focus on the 17% that have some regret about their purchase? Is that number high or low compared to regret after other major purchases (such as taking on a car loan)?

If the number is accurate, why not discuss the 83% of millennials who did not regret their purchase? Are there different reasons for choosing which number to highlight (even when both numbers are true)?

And is the number what the headline makes it out to be? The paragraph cited above suggests the question from Zillow might be less about regret in purchasing a home versus regret about owning rather than renting. Then, perhaps this is less about the specific home or mortgage and more about having the flexibility of renting or other amenities renting provides.

In sum, this headline could be better. Interpreting the original Zillow data could be better. Just another reminder that statistics do not interpret themselves…

Slight drop in millennial population in American big cities

The population of big cities may depend on millennials: will they flock to urban locations or leave for the suburbs? New data suggests slightly more of them are headed out of cities:

Cities with more than a half million people collectively lost almost 27,000 residents age 25 to 39 in 2018, according to a Wall Street Journal analysis of the figures. It was the fourth consecutive year that big cities saw this population of young adults shrink. New York, Chicago, Houston, San Francisco, Las Vegas, Washington and Portland, Ore., were among those that lost large numbers of residents in this age group…

The 2018 drop was driven by a fall in the number of urban residents between 35 and 39 years old. While the number of adults younger than that rose in big cities, those gains have tapered off in recent years.

Separate Census figures show the majority of people in these age groups who leave cities move to nearby suburbs or the suburbs of other metro areas.

City officials say that high housing costs and poor schools are main reasons that people are leaving. Although millennials—the cohort born between 1981 and 1996—are marrying and having children at lower rates than previous generations, those who do are following in their footsteps and often settling down in suburbs.

MillennialsCities2019Data

An interesting update: millennials as a whole are leaving cities but younger millennials are still going to cities while the oldest ones are leaving. Does this mean that the argument that young urbanites will still leave for the suburbs when they form families and have kids?

Maybe, maybe not. It would be helpful to know more:

1. How does the older millennial move out of cities compare to previous generations? Are they leaving cities at similar rates or not?

2. Is there significant variation (a) within cities over 500,000 people and (b) within smaller big cities (of which there are many)? The first point could get at some patterns related to housing prices. The second could get at a broader picture of urban patterns by not focusing just on the largest cities.

3. The true numbers to know (which are unknowable right now): what will the numbers be in the future? The chart above suggests some shifts even in the last decade. Which pattern will win out over time (or will the numbers be relatively flat, which they are for a number of the years discussed above)?

Scenarios in which McMansions are passed along to younger adults

Older Americans own plenty of large homes and commentators suggest younger adults have multiple reasons for not going after such homes:

Younger people have loads of reasons not to be charmed by the vaulted ceilings and chef-ready kitchens of homes perched on mountaintops or hugging beaches that promised solitude once but now cry of isolation…

A report from Business Insider highlights numerous reasons that younger people might not want to saddle themselves with such beautiful albatrosses. Down payments, student debt and preferences for rentals in cities coupled with vacation home getaways have all contributed to what the report characterizes as “millennials wiping out starter homes.”…

And that is those among them who can actually manage to save up a down payment. Too many others are so burdened by student debt that buying a house is a foggy image off in the distant future. And lots of young homebuyers underestimate what it will cost them to keep a house, making it less likely they’ll bite off more than they can chew the next time they go home-shopping.

Factoring in their concerns over the environment—the energy footprint of a big house and a long commute—and their disinclination to own cars, as well as the need to hold down multiple jobs or have one or more side hustles—and it looks as if those mega-residences are liable to stay on the market for quite a while longer.

While one angle to this is that Baby Boomers will have a hard time selling their homes, the other side is whether the younger generations want and can get to such homes. I have seen little suggestion that young adults truly desire McMansions.

But, I would not write off this possibility just yet. I could imagine several possible scenarios where McMansions happen to end up in the hands of future generations:

  1. Younger adults do well enough economically – or enough of them do since not all Baby Boomers own big homes either – to keep McMansions going.
  2. Baby Boomers cannot sell their large homes, the prices drop, and the homes are more in the reach of younger adults.
  3. Enough McMansions are converted to other uses – think multi-family housing – to keep the prices up enough to keep everyone happy. (Or, in a more dystopian model, McMansions are simply bulldozed or replaced to limit the supply.

I have a sneaking suspicion McMansions will be passed along in decent numbers to the next generation…despite the wishes of some.