Are you interested in over 80 million of the most highly educated and diverse Americans moving to your town? Then set your sights on millennials. Also known as Generation Y, millennials are those born between 1980 and 2000 and are the largest generation in U.S. history. Across the country, these young adults are reshaping the real estate landscape in search of one-of-a-kind residential communities with premier amenities, but at affordable prices.
Historically, millennials have shown greater interest in large city centers comprised of luxury apartments, food trucks, convenient transit access and trendy bar scenes. Imagine New York’s SoHo, Hoboken, New Jersey, and Washington, D.C. However, only 17% of millennials purchased homes in urban or city centers in 2015, according to an annual survey by the National Association of Realtors (NAR). “It is just too expensive to buy in a city where the mortgage for a small condo costs as much as a 3,500-square-foot home elsewhere,” explains Ernestine Patron, a 31-year-old South Jersey millennial.
So, what is trending for the first-time buyer millennial? The suburbs.
Millennials are increasingly relocating to (less expensive) suburbia to buy real estate. Last year, the median income of a millennial homebuyer was $77,400, and he or she purchased a 1,720-square foot home for approximately $187,400. According to the NAR study, “the millennial generation’s desire to own a home of their own as the primary reason for their purchase” has increased to 48% (from 39% in 2014). Marriage and children are also important factors in the trend toward suburban lifestyles for millennials, who now have a median age of 30 years old. In addition, millennial families overwhelmingly favor single-family homes. National Association of Home Builders reports that 75% of prospective millennial homebuyers prefer detached single-family homes rather than townhomes (11%) or multifamily condos/apartments (4%).
While studies have predicted these trends for years, real estate developers are slow to capitalize on the suburban-bound millennial movement. According to Lawrence Yun, Chief Economist for NAR, “even if an urban setting is where they’d like to buy their first home, the need for more space at an affordable price is for the most part pushing their search further out.” Unfortunately, most suburban communities do not afford millennials the amenities they desire. As a result, many are forced to purchase older homes in the closest suburb to their favorite trendy city; meanwhile, these millennials can own real estate at a fraction of the cost. “There is a missed opportunity to bring walking trails, daycare centers and coffee shops into new, suburban communities – neighborhoods specially designed with us in mind,” explains Ernestine. “As first-time homebuyers, we really do not have many options.”
Yolanda is a millennial attorney and member of Cooper Levenson’s Land Use Department where she works on various land use issues, including commercial development, redevelopment, real estate, affordable housing and litigation. She focuses her writing on real estate development and economic trends pertaining to millennials in an editorial series titled, “The Millennials Are Here!” Yolanda’s blogs have been studied in college writing courses throughout the country and her work has been featured in a national publication.