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Millennials are flocking to cities, but a study published last month by the Urban Land Institute (ULI) challenges the notion that throngs of them are living at the urban core. Saving money remains a top priority, translating to living with roommates in more affordable, less central areas, or with parents.
The study, titled “Gen Y and Housing: What They Want and Where They Want It,” was conducted in November 2014 and is based on a nationwide sampling of 1,270 people aged 19 to 36. The study explores what impact the Great Recession continues to have on the lives of Generation Y when it comes to housing and employment prospects.
Where Millennials Live
Just 13 percent of Millennials live in or in close proximity to downtowns. More than half (63 percent) live in less centrally located neighborhoods or in the suburbs. Half of Millennials are renters who pay a median rent of $925 per month. Almost a quarter (21 percent) live at home, and of that group, 42 percent moved back in with their parents after living on their own. Multi-generational living is familiar to this age group: 14 percent reside in households where three generations of family live together.
Renting is still a compelling choice for Millennials because it is low maintenance and offers greater flexibility. In spite of the sacrifices that members of this generation are making in order to afford living on their own, they still show a marked preference for walkability, not needing to own a car, and living within easy reach of entertainment, shops, and gathering places.
The study suggests that “the current trend of urbanizing suburbs will present lucrative opportunities for the development community for years to come,” says M. Leanne Lachman, president of Lachman Associates, the ULI trustee who co-authored the study with Deborah Brett, founder of Deborah L. Brett & Associates, in a statement released by ULI. “This is a generation that places a high value on work-life balance and flexibility. They will switch housing and jobs as frequently as necessary to improve their quality of life.” The ULI survey portrays Millennials as optimistic about advancement in the years ahead, regarding both where they live and the jobs they will hold. Though less than half feel that owning a home is a good investment, 70 percent expect to be homeowners by the year 2020, counting on using money they’ve saved for a down payment.
Millennials and the Housing Recovery
As the number of Millennials who want to own homes continues to grow, this generation will be an essential component of the housing recovery, say several sources, including the State of the Nation’s Housing report, published in 2014 by the Joint Center for Housing Studies of Harvard University.
Despite recent housing industry growth, sales have yet to fully recover from the Great Recession, and approximately 2.1 million adults continue to live with their parents while student loan balances increased by $114 billion in 2013, according to the Joint Center’s report. But the report also projects that a rise in incomes and greater access to credit will lead to households between the ages of 24 and 34 accounting for some 46 percent of the first-time homebuyer market.
Chris Herbert, research director at the Joint Center for Housing Studies, points out that the housing recovery is following the same path as the broader economy. Provided that the overall economy shows slow but steady improvement, Herbert says, the housing industry should parallel this trend.
