With new surveys finding an increasing percentage of millennials choosing to live in the suburbs rather than the city, the commercial real estate market is shifting to accommodate an updated version of an old American dream. While the generation that came of age in the 1980s and ‘90s may not all be ready to purchase homes just yet, predicting whether they will go for high rises or white picket fences in the next 5-10 years is an important trend among housing economists.
While the trend of millennials flocking to cities has been strong for the past several years, recent findings of surveys like the one released by the National Association of Home Builders are finding the opposite to be true. Based on 1,500 responses from people born after 1977, the survey found that 66% hope to live in the suburbs. Only 10% polled responded that they hope to remain in a major urban center longterm. The obvious reason for this desire to get out of the city? More space.
A similar survey conducted last year by real estate website Trulia also found that 56% of the more than 2,000 people polled would rather live in the suburbs or countryside than an inner city, citing the desire for more space, a yard, and amenities. Among millennials, 7 out of 10 plan to buy a single family suburban house within the next few years.
Where millennials choose to live isn’t just a personal choice, though. With this generation making up between 70 and 80 million people in the U.S, their housing preferences will have a huge impact on real estate, among other industries. This is the biggest population group since the Baby Boomers, and their effect on real estate could be just as big.
Urban real estate investors need not worry, though. Because many Gen Yers are saddled with student loans and still recovering from the financial crisis of 2008, they won’t be leaving the city in droves just yet. As home ownership has always been tied to getting married and having children, the rising average age of those life milestones will also keep this demographic as city slickers longer than their parents. Urban condos and apartment buildings are still lucrative investment options, as millennials routinely cite the proximity to work and nightlife as major factors in choosing where they live.
Add to the mix the trend of baby boomers staying put in their homes for longer than ever before, and it will be interesting to see what happens to the suburban housing market in the next decade. Will a decrease in the supply of suburban homes that will appeal to millennials drive up prices so that even if they would prefer to leave the city, they end up staying? Predicting the future of the housing market is a bit like predicting the weather, but the trends of the biggest demographic in the country are certainly worth following for anyone interested in real estate.