Are suburbs now cool or are they just an attractive option at the moment?

An analysis of why the suburbs are currently attractive to millennials starts with a headline about the suburbs being cool but mainly discusses practical life issues:

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Changing attitudes about commutes.

Credit analyst Kailyn Hart was living in a 1,300-square-foot apartment in bustling Mid-City, Los Angeles with her fiancé, Dominic Wilson, and their 1-year-old son when the pandemic forced her to begin working from home. Being able to work remotely gave Hart—who had been watching mortgage rates for a good buying opportunity since 2017 —the kick she needed to purchase a 4-bedroom, 2,300 square-foot house with a backyard in Fontana, Calif, a 47-mile drive from L.A. “My boss told me that I’ll at least be working remote until December, and after that I may only be going into the office just once or twice a week,” says Hart, 32…

A need for more space…

“We’ve seen a surge of buyers who want to leave downtown for the suburbs,” says Nicole Fabiano-Oertel, a real estate agent at Compass in Chicago. “The most common reason is they want more space, whether that’s indoor space or outdoor space, or both.”…

Why pay city prices, when you can’t live the city life?…

Corey Jones, a real estate agent with Better Real Estate in Plainfield, N.J., says affordability is a driving factor for a lot of urban residents who are decamping to the suburbs. “What we’re hearing from clients more and more now is: why rent and pay city prices when you’re working from home?”…

Good public schools.

Generally, public school systems in the suburbs outperform schools in urban areas with respect to test scores, graduation rates, and college placement. Suburban schools also usually have more outdoor space for sports and other recreation. And, a number of parents who send their kids to expensive urban private schools have expressed that they’re less willing to keep paying if the schools go remote this year.

None of these reasons sound particularly cool. They sounds more like calculated decisions given the current circumstances: Americans tend to like larger private spaces, they have a lot of stuff, and they think certain places are better for raising children. These are all part of the ongoing appeal of the suburbs.

Going further, I wonder when suburbs were cool. Even as Americans moved to suburbs in large numbers in the twentieth century, were they ever the place to be? All during this period, critics of the suburbs pounded away at the problems: exclusion, conformity, soulless, mass produced, overreliance on driving, and on and on. Even as millions adopted a suburban lifestyle, it was not always portrayed in media products as the exciting or hip or sophisticated choice. Suburbs may have more entertainment centers than ever but they do not compare to the vibrant cultural centers and neighborhoods of big cities.

Perhaps the connection here is that millennials may be more interested in suburbs right at this moment. As relatively young adults, they have a higher cool factor and are not as locked into life paths. Just moving to the suburbs suggests younger Americans think the suburbs are a viable option…and this may be as cool as the suburbs get.

Millennials looking for “hipsturbia”?

An article about millennials settling in the suburbs of Colorado includes this summary of what millennials are looking for:

Essentially, millennials want the best of both worlds — the more affordable and spacious housing and better school districts found in the suburbs and the walkability and bustle of activity that older city neighborhoods offer.

The Urban Land Institute and accounting firm PwC, in their Emerging Trends in Real Estate report for 2020, have coined a term for the crossbreeding that is taking place — hipsturbia.

“Many of these ‘cool’ suburbs are associated with metro areas having vibrant downtowns, illustrating the falsity of a dichotomy that pits central cities against ring communities,” according to the report.

Sounds like the “surban” place described in the Chicago Tribune: single-family homes with more community amenities within walking distance. And you say the supposed battle between cities and suburbs is not necessary?

From the beginning in the United States, suburbs offered a middle ground between city and country. The early suburbs of the mid-1800s offered single-family homes surrounded by nature and some early suburbs were designed in ways to play up the connection to nature. Also from the beginning, some suburbs were closer to urban life than others and offered homes in denser settings. Some of these suburbs would later become known as inner-ring suburbs. More recently, pockets of suburbia have emphasized higher densities that might have grown around traditional downtowns or around new mixed-use developments. All that say, suburbs can be viewed as occupying a middle ground between different locations and hipsturbia continues that trend with offering features of both suburban and city life.

On a related note, it would be interesting to see if any suburbs come to have a mass of millennials. Just as urban neighborhoods can be ranked by the proportion of their millennial population, so might suburbs. If there is a critical mass, would this significantly change suburban social life?

Six suburbs for Generation Z

Homes.com surveyed Generation Z, found their preferences for where they want to live, and then matched those preferences with six suburbs:

In deciding where to buy a first home, each generation has likes and dislikes that reflect its values and priorities. Recently Homes.com surveyed more than 1,000 members of Generation Z to find out more about their home-buying plans, including what kind of neighborhood they prefer.

The survey found preferences centered around four characteristics:

Diversity. More than half prefer neighborhoods and communities that are racially and ethnically diverse;

Accessibility. Three out of four want a location that is accessible to work as well as to friends and family;

Safety. This is a priority when Generation Z-ers evaluate neighborhoods

Affordability. Generation Z is very aware of rising home prices that have kept millions of millennials from becoming homeowner.

And the six suburbs:

-Lilburn, Georgia (outside Atlanta)

-Florin, California (outside Sacramento)

-Shaker Heights, Ohio (outside Cleveland)

-Glendale Heights, Illinois (outside Chicago)

-Valley Stream, New York (outside New York City)

-Stafford, Texas (outside Houston)

Given these four traits and these six suburbs, there is limited representation from some notable big coastal cities including Los Angeles, San Francisco and the Bay Area, Seattle, Boston, and Washington, D.C. Presumably, these metropolitan are too pricey to meet the priority of affordability.

Additionally, it is interesting to not see on the list cultural opportunities or an exciting location. All big cities have hip locations or neighborhoods that might fit the bill or some of this could be rolled into other factors above. Yet, the list also does not include places like Austin and Denver which have a reputation for being cool.

Finally, I do not know the longer histories of these suburbs. Right now, they are quite diverse (at least in comparison to the image of white and wealthy suburbs) but they might not always have been that way and may not have the same composition in the future. If a lot of Generation Z buyers move to these communities, how would they shape the demographics and character of each suburb?

Black homeownership rates similar to before 1968 Fair Housing Act

An article about homeownership among black millennials includes this statistic:

Homeownership levels for blacks reached 42.7% in the third quarter of 2019 (compared with 64.8% for the overall population), a near-record low that has virtually erased all of the gains made since the passage of the Fair Housing ACt in 1968, landmark legislation outlawing housing discrimination, census data show.

“African Americans are already being left out of the housing market and that’s exacerbating levels of inequality in this country,” says Lawrence Yun, chief economist and senior vice president of research at the National Association of Realtors. “There’s a kind of urgency now within the housing community to bring younger African American buyers into real estate.”

Despite a decade of economic growth in the United States, including record low unemployment and higher wages for black workers, millennials of color make up only a small portion of the overall market for real estate, data show.

This cannot be good. Even as other economic figures might be good, owning a home offers a key way for Americans to build wealth over time. Going further, not having a home means being at the whim of landlords, perhaps more instability regarding having housing, and limited access to wealthier communities where a majority of residents own homes. Furthermore, this data suggests not much has changed in 50 years; does this hint that the gap between groups in the United States remains relatively unchanged?

If the next generation of young adults is struggling to purchase homes, that suggests the problem will continue for at least another 10-20 years. If there are politicians serious about fighting inequality, wouldn’t this be a good issue to take up, particularly given the persistent gaps between black and Latino homeownership and white homeownership?

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)?