Tag Archives: millennials

Employers now looking for millennial workers in denser suburbs

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Even as some companies go to the big cities looking for young talent, others are headed to denser suburbs to find millennials with families who are attracted to suburbia:

Fresh college graduates might be attracted to downtown bars and carless commutes, but these days, for older millennials starting families and taking out mortgages, a job in the suburbs has its own appeal. “What people find is that the city offers a high quality of life at the income extremes,” said Lamphere, who is chief executive of Van Vlissingen & Co., a real-estate developer based in the Chicago suburb of Lincolnshire, Ill. “The city is a difficult place for the average working family.”

Many employers, hoping to attract millennials as they age, are trying to marry the best of urban and suburban life, choosing sites near public transit and walkable suburban main streets. “What’s desired downtown is being transferred to suburban environments to attract a suburban workforce,” said Scott Marshall, an executive managing director for investor leasing at CBRE Group…

None of this means the suburbs will supplant central cities as job hubs. After all, jobs traditionally based in cities-jobs in professional industries as well as the service jobs that support them-are growing faster than those typically based outside of them, according to Jed Kolko, chief economist at Indeed.

At the same time, Americans are more likely to live in the suburbs today than they were in 2000, and even the young, affluent ones drawn to cities tend to move once their kids reach school age, Kolko’s research shows. Many of those workers will suffer long commutes into the city center. Others will opt for jobs closer to their suburban homes.

Which of these two patterns is more true: (1) employers chase locations in a cyclical nature with more moving to the suburbs after World War II and then returning to the city or some cities in more recent years as certain urban locations became trendy and/or desirable or (2) employers since World War II have regularly gone back and forth between cities and suburbs depending on their employee needs and changes within metropolitan regions. Since I do not study this exact topic, I do not know which explanation the data matches (or if there is even a third option). Yet, certain interested parties – the media, city and suburban leaders, and companies often like to push a particular narrative to help their side look better.

Indeed, this article suggests a third option: employers want to find millennials who want both the suburban life – nice, safe, quiet communities – and the urban life – exciting cultural scene. Certain suburbs do offer this kind of lifestyle and some academics have argued this is the way the suburbs are going: even as some will still be interested in spreading the edges of suburbia further and further out, at least a few suburbs will become denser and influential small cities. I’m not sure this is entirely tied to millennials as such locations could appeal to older suburbanites who want a more walkable area and may not require single-family homes.

In other words, the jury is still out on this as a possible trend.

Millennials seek suburban homes and SUVs

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Recent data shows several consumption patterns among Millennials:

Generationally speaking, the stereotype of millennials as urbanites falls flat when it comes to homeownership. The Zillow 2016 Consumer Housing Trends Report found that 47 percent of millennial homeowners live in the suburbs, with 33 percent settling in an urban setting and 20 percent opting for a rural area.

Millennial homebuyers do wait longer to buy a first home than did previous generations. But they are skipping the traditional “starter home” and buying larger homes that were previously considered the norm for “move up” buyers…

Erich Merkle, an economist with Ford, says that as millennials cross the threshold into family life, they’re buying large SUVs.

“We expect them to carry on as they age with three-row SUVs and likely go larger simply because they need the space to accommodate children that are now teenagers or preteenagers,” he said.

That combination so emblematic of 2000s consumption – the suburban big home (a McMansion?) and SUV – may be back. On one hand, perhaps this is what millennials are used to or they think they should aspire to. On the other side, consuming these objects can draw criticism. Did Americans learn anything (housing bubble, reliance on cheap oil)? Do they understand the consequences of these purchases (a commitment to sprawl and consuming more than they need)? How could they make such uncool choices (compared to dwellings in hot urban neighborhoods or acquiring cooler vehicles)?

Perhaps this suburban driving culture will continue for a long time…

The big Baby Boomer house does not necessarily equal a Mcmansion

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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.)

Most millennials want to buy a home but we keep finding ones who don’t want to

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Here is a recent story that both includes survey data that most millennials want to purchase a home yet leads with one who does not want to do this:

Niederkorn, a member of the millennial generation, currently lives with his parents but said he plans to be a renter for life and never buy a home. He craves the ability to pack up and go, he said, and doesn’t want to be saddled with a home loan, property taxes or homeowners associations fees. And though this may put him in the minority — an Apartment List survey of about 24,000 renters nationwide released in May found that 80 percent of millennial renters want to buy a house or condo sometime in the future — it does raise some interesting questions about the American Dream and the place of homeownership within it.

The historical overview of homeownership that follows is helpful but it is a weird premise: the cited data suggests there is a clear pattern but there is this one suburban guy who is going another direction. Do we follow the data or the single story?

On a related note, journalists are fascinated with millennials and what they may or not do, including buying a home. When I see such stories, I wonder if this is masking three different purposes:

  1. This is just another way to suggest there is a trend (journalists are always looking for trends).
  2. Journalists really hope millennials usher in major changes to American society.
  3. Younger journalists often live in big cities and want other millennials to affirm their choices.

Homeownership and suburban living is a hot topic in this area: will millennials follow their parents to the cookie-cutter suburbs and live boring lives? (There is often an evaluation of the suburbs included in the story.) I haven’t seen many articles where the conclusion is that many or most millennials will end up in the suburbs.

Predicting the “great senior sell-off” to come

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Here is an update on one event that might be coming down the road: the time when the Baby Boomers decide to sell their homes.

Nelson pointed to the affordability issue as well as the fact that about a quarter of Millennials prefer urban housing, such as condos or townhouses, over the detached suburban homes that were the Boomers’ preferred habitat. Younger buyers, he said, will also be looking for starter homes—smaller than the big Colonials and split-levels that line America’s cul-de-sacs. “We can predict the next housing crash,” he said at the time. “That’ll be in about 2020.”

Four years later, Nelson tells CityLab that that he believes the sell-off will still occur—but later, in the mid- to late 2020s. This has to do with people deciding to defer selling their homes, hoping to get a better price later than settling for a lower price now. “Home values in much of the country are still less than those before the Great Recession of 2007 to 2009,” he says. Prior to the recession, the typical homeowner would sell a house about every six years. “It was like clockwork,” says Nelson. “This drove a lot of planning and development projections.”…

Nelson predicts that the fringe areas surrounding cities will bring the biggest headaches for Boomers looking to unload their houses. Because Millennials will be looking for small homes when they finally start to buy in larger numbers, the sprawling McMansions of the exurbs won’t be desirable to many of them. “The Boomers in the exurbs are going to be in a real pickle,” says Nelson. “Even in a dynamic market like Washington, D.C. or other booming cities, the market for those homes is going to be soft.”…

But many analysts do agree on one thing: More housing will need to be built for Millennials—and it needs to be scaled to their desires, not their parents’s. “Millennials are likely to prioritize different features in their homes, such as greener materials or in-law suites,” says Molinsky. And according to the Harvard Joint Center’s projections, nearly 90 percent of those looking for homes in 2035 will be under 35 or 70 and over—and both groups tend to buy less square footage.

I suppose we’ll see what happens. I tend to think that Millennials might not be as transformative as some have suggested in regards to where they want to live or in what kinds of houses they inhabit. At the same time, there may be fewer Millennials than Baby Boomers in the market for housing – both due to different sizes of the various cohorts as well as the limited purchasing power of some Millennials  which means it could take some time for those Baby Boomer dwellings to find buyers.

It is also interesting to consider what might happen if these homes, particularly those on the metropolitan fringes, can’t be sold. Would they be demolished? Converted? The community retrofitted? Drop to a low enough price that they become very attractive to certain groups? We have plenty of history as a country of people spreading out but not much experience with any serious contraction.

Claim: Millennials can’t buy a house so they are serfs

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Joel Kotkin makes a bold claim regarding the inability of millennials to purchase a home:

Like medieval serfs in pre-industrial Europe, America’s new generation, particularly in its alpha cities, seems increasingly destined to spend their lives paying off their overlords, and having little to show for it.

No wonder that rather than strike out on their own, many millennials are simply failing to launch, with record numbers hunkering down in their parents’ homes. Since 2000, the numbers of people aged 18 to 34 living at home has shot up by over 5 million…

It’s time for millennials to demand politicians abandon the policies that have enriched the wealthy and stolen their future. That means removing barriers to lots of new housing in cities and, crucially, embracing Frank Lloyd Wright’s notion of Broadacre Cities, with expansive development along the periphery.

These new suburbs, like the Levittowns of the past, could improve people’s lives, while using new technology and home-based work  to make them more environmentally sustainable. They could, as some suggest, develop the kind of urban amenities, notably town centers, that may be more important to millennials than earlier generations. One thing that hasn’t changed is the demand for affordable single-family homes and townhomes. But the supply is diminishing—those under $200,000 make up barely one out of five new homes.

This is a familiar argument for Kotkin: millennials really do want to own homes in the suburbs – like many other Americans since the early 1900s – and economic policies limit their opportunities.

But, this argument is still overstated in its claim that millennials are serfs. Kotkin gets at a deeper question: is homeownership essential to the American way of life? More specifically, a suburban home in a nice community? There is much in American history to suggest that owning land and a home is key, even if it isn’t a right. Yet, does it necessarily have to always be part of American life? Could Americans decide that they value other things (and not be forced away from homeownership by forces outside of their control)?

The flow of young adults to cities has slowed, leading to the idea of “peak millennial”

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Have we reached “peak millennial” for America’s cities?

Dowell Myers, a professor of demography and urban planning at the University of Southern California, recently published a paper that noted American cities reached “peak millennial” in 2015. Over the next few years, he predicts, the growth in demand for urban living is likely to stall…

The debate is full of contours and caveats, but it really boils down to this: Are large numbers of millennials really so enamored with city living that they will age and raise families inside the urban core, or will many of them, like earlier generations, eventually head to the suburbs in search of bigger homes and better school districts?

Their choices — and it will be at least a few years before a definitive direction is clear — will have an impact on city budgets and gentrification fights. It could change the streetscape itself as businesses shift. It will affect billions of dollars’ worth of new apartments built on the premise that the flood of young people into cities would continue unabated.

It could also have a big impact on the American landscape more generally. For the past half-century, the trend toward suburbanization has continued with no real opposition. Even in the 1990s and 2000s, when urban areas were starting to turn around, subdivisions continued to expand. Have millennials ended that trend?…

Stay tuned. A few quick thoughts:

  1. One underlying issue here is the idea that cities need to keep growing in population in order to be vibrant or relevant. Can all American cities grow at significant rates? Should they?
  2. As noted in this article, the pull of suburbs is still strong. Any reversal from suburbs to cities is likely to happen over decades, not within a short span or a single generation.
  3. If cities are affected by a small generation after millennials as well as a declining rate of millennials staying in cities, who will they try to attract next? The article also notes that immigration levels have stabilized. Will there be a new plan from mayors and other urban leaders to bring in more residents?

Prediction: homeownership rate will continue to drop through 2025

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One analyst suggests the falling homeownership rate will continue to fall:

Burns predicts the homeownership rate will continue to fall through 2025. Which means that millennials will be renting for a lot longer than their parents’ generation did.

In 2004, when the overall homeownership rate peaked at just under 70 percent for all age groups, those born in the 1970s were 25–34 years old, moving out on their own and forming new households…

Today, with mortgages harder to get and memories of the housing bust fresh in buyers’ minds, the homeownership rate among 25–34-year-olds has fallen to just 39 percent…

Based on his estimates, the overall homeownership rate will fall to just 60.8 percent by 2025, the lowest since the mid-1950s.

As noted in the last paragraph of the article, there will still be more homeowners than before (because the population of the United States continues to increase) but the percentage of Americans owning homes will drop. If the rate matches that of the mid 1950s, we would be back in a early suburban boom era except it would be hard to imagine a similar new boom on the horizon.

Peak urban millennial reached?

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A new study suggests millennials are now less interested in settling in big cities:

Millennials have been singled out as the stuff cities are made of, but Dowell Myers, a professor at the University of Southern California’s Price School of Public Policy, says the real estate industry should be bracing for a shift back to suburbs…

In a study published in late April in the journal Housing Policy Debate, Myers examined Realtor surveys and various sources of federal data…

Myers, however, found that circumstance was the likely driver of urban living: Three cycles — one demographic, one economic and one housing-based — converged in the 2000s to drive millennials into downtowns.

All three have reversed their effects, he said.

If this holds up, two possible consequences:

  1. Cities have worked hard in recent decades to appeal to young, educated adults – the Creative Class, in particular. If this group doesn’t move to cities in as large of number, who will cities try to attract? They may still go for wealthier empty nesters and retirees who can purchase housing and contribute to the tax base. But, they don’t quite have the same benefits as vibrant, motivated young people.
  2. If they aren’t going to the big cities, suburbs and suburban developers will increasingly look for ways to attract this demographic. Denser, more vibrant suburban areas could be appealing as they offer “city-lite” living. This could lead to more smaller yet having-all-the-features suburban housing.

A McMansion has been part of the American Dream for a while

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Teen Vogue suggests the historic American Dream involves a McMansion:

The mythic American Dream, defined by the wordsmiths at Merriam-Webster, is an “American social ideal that stresses egalitarianism and especially material prosperity.” We all know what that social ideal has looked like historically: a 9-5 job, two cars, two kids, and one McMansion complete with a white picket fence. It’s what your parents, grandparents, and probably even great-great-grandparents aspired to (though they probably didn’t use the term McMansion in the’50s — McDonalds was still at novelty back then).

But according a new poll conducted by Harvard’s Institute of Politics, 48% of millennials believe the American idyll is dead. More than 2,000 young Americans between 18 and 29 years old were interviewed about the government, the military, the future of the country, and the collective outlook on the future is…not great!

The caveat in the first paragraph may be important: people in the 1950s didn’t use the term McMansion as it didn’t really become widely used until the late 1990s (and yes, the Mc- prefix also wouldn’t have made much sense). But, did those post-war suburbanites really aspire to a McMansion, often defined as an overly large, poorly built home sitting on a small lot within the sprawling suburbs? Not really. Many of those early suburban single-family homes were quite modest in size. The Levittown homes were around 1,000 square feet and could even be purchased with unfinished second levels. In comparison, today’s new homes are roughly 2.5 times the size of the average new homes of the early 1950s. Many post-war suburban homes were mass produced but they weren’t considered garish or ostentatious. Were these new suburban homes better than many of the other housing options after World War II? Yes and there was indeed a real housing shortage. But, it is a real stretch to claim the American Dream always included a Mediterranean inspired 3,000 square foot home tightly packed into a small lot in a gated neighborhood.