The Millennial Urban Exodus

Every publication in America claims that all the "millennial generation" cares about is avocado toast, Snapchat, and living in the big city. However, studies show that this isn't necessarily the case. Despite preconceptions that millennials are concentrating in coastal urban areas, in reality, many of them are moving out of the cities in search of affordable housing.

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Following Cheap Property

Reports by Harvard show that more and more millennials are leaving densely packed urban centers in favor of the suburbs. Young people in America are making most of their home buying decisions based on affordability. The majority of young people would like to own their own home, which in most cases requires them to leave coastal hubs such as New York, San Francisco and LA in favor of neighboring outskirts or smaller cities.

The main thing stopping millennials from purchasing houses is cost. The Harvard study concluded that millennial homeownership rates were 5% higher in cities where home prices were 20% lower than the national median. In low cost markets such as Birmingham, Detroit, Minneapolis and St. Louis, millennials were much more likely to be homeowners. This implies that millennials are eager to purchase a house if it is within their budget.

Low housing prices are luring young people to metro areas in the middle of the country. Minneapolis has seen rapid growth in its millennial population in recent years. With an appealing job market and lower housing prices, the Minnesota city has become an attractive option for young people looking to put down roots. According to a recent study, 42.4 percent of millennials in Minneapolis own a home, making it the city with the largest percentage of millennial homeownership among the nation's biggest 45 metropolitan areas.

If Minneapolis millennials saved 15 percent of their income annually it would take them 10.2 years to save enough for a down payment on a home. While a decade's worth of saving is nothing to sneeze at, it is a substantially shorter timeline than most millennials face. Nationwide, millennials must save at that rate for 15.6 years before they can put down a down payment on a $278,337 house.

The American Dream Is Still Kicking

Another big push towards the suburbs is a desire for houses. While the public stereotypes millennials as apartment dwelling urbanites that prefer the flexibility of renting to the responsibility of home ownership, in reality, many hold more traditional values. The majority of millennials want to own property, particularly a single-family home. Many of them cite their desire for children and pets as key factors in their decision to choose a house over an apartment.

Homeownership rates have been lower than in previous generations. As of today, millennials comprise only 10% of American homeowners. But this slowdown in home buying is caused more by financial burden than by differences in values. Facing crippling student debt, the recession, stagnant wages, and skyrocketing real estate costs, homeownership seems like a distant dream to many millennials. In 2016, millennials purchased 35 percent of the houses sold in America. This is down from 41 percent in 2005, according to a Harvard study.

The New Wave

However, times are changing. The median age of a millennial is 25, and the average age of a first time homebuyer is 31. This seems to suggest that we will see a large wave of millennial home buyers in the next decade.

Some academics claim that millennials' attachment to urban centers was born out of necessity, not affection. Demographer William Frey argues that millennials were "stuck" in cities by the 2008 economic crash and subsequent slow recovery. Weak job prospects and declining wages, compounded by massive student debt, made suburban home ownership more challenging for this generation.

These scholars claim that while millennials have been brunching it up in Brooklyn, their hearts have been in the suburbs. And as the millennial generation ages into marriage and family, more and more of them will make the move out of the city. A more robust job market has also encouraged mobility among young people.

Dowell Myers, urban planning professor at the University of Southern California, notes that people have long mistaken presence of a large millennial population in cities for a preference for cities. He argues that in reality, surveys show that more millennials would like to live in the suburbs than actually are.

It remains to be seen how the housing market will respond to the incoming influx of millennial homebuyers. Real estate developers have primarily been targeting young people with newly built condos in the city centers. These developers assume millennials want luxury amenities, an urban feel, and convenience, and that they are willing to sacrifice privacy and square footage to get it.

If what millennials really want is actually suburban single family homes, it will be interesting to see what comes of these shiny new high rises, and if there will be enough inventory in the suburbs to support the wave of millennial homebuyers, eager to leave the city.

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