July 5, 2018
Millennials are moving to the suburbs in a big way. In 2017, 36% of all home buyers were Millennials, with 50% of those homes located in the suburbs. The urban core, by contrast, which has been drawing Millennials since 2000, is projected to lose 0.7% annually over the next five years.
Beginning in 2000, young adults began to move to the core of U.S. cities, driving the average growth of 1.5% every year in that age cohort of twentysomethings and early thirtysomethings. The draw? Close-by offices, cultural and recreational events, and restaurants and pubs that catered to the young adult crowd.
Millennials are forsaking the cities for the suburbs.
But in a dramatic reversal, Millennials — the official name for those twenty- and thirtysomethings — are moving to the suburbs. The city cores nationwide are expected to lose 0.7% every year over the next 5 years, as more and more Millennials buy their first homes in the suburbs.
Into the Crabgrass Frontier
In 2017, Millennial home-buyers led the market, with 36% of all home buyers belonging to the group. More than 50% of those homes are being purchased in the suburbs, for the third consecutive year.
Not only that, but Millennials have led the home-buying market steadily since 2013. Two-thirds of first-time home buyers are Millennials. The numbers of Millennials buying homes reverses one of the long-held pictures of Millennials.
Millennials Are Resilient
The Millennial generation has faced major obstacles, including the following:
Although Millennials were significantly impacted by the Great Recession’s effect on their finances and early job prospects, and many are affected by student debt, a large percentage of them have been saving for houses and forming families. In fact, some geographic information indicates that they may have been saving more than previous generations.
An increasing number are making the leap other generations have, to the crabgrass frontier of the suburbs. Thirty percent of Millennials are purchasing houses costing over $300,000, a 15% increase in people buying at that price since 2013. The price is above the usual price of a starter home.
However, there are still signs that lifestyle delays continue to haunt Millennials. While over 35% of those under the age of 35 own their homes, that’s still below the 43% who did before the Great Recession.
An increasing number of Millennials are buying homes in the suburbs.
Buying in More Affordable Places
The other big real estate move among Millennials is the move to more affordable places. The large East and West Coast cities like New York and San Francisco, once magnets for ambitious young people have become prohibitively expensive for many.
While high-cost Seattle is still the #1 city that Millennials move to, its cohorts in the top 5 are notably not high cost. They are Columbia, South Carolina, in the #2 position; Sacramento, California, in the #3 spot; Minneapolis, Minnesota in the #4 position; and Jacksonville, Florida, bringing up the #5 spot. The glittery cities of yesteryear, like Los Angeles, are nowhere to be found.
Maximize Your Business with an Experienced Loan Sale Advisor
The Millennial move to the suburbs will increase housing and mortgage demand, both now and over the next 5 years or longer.
If you’re in the market to benefit from increased mortgage production, Garnet can help. We assist both banks and credit unions to buy or sell mortgage portfolios. For more information, sign up for our newsletter.