As a parent raising my children in SoCal, I found that some of the best conversations we had were when we were driving. It’s funny that even though my children are grown, I find some of our best conversations are still while at least one of us is driving. My youngest son, 26, called me the other day to ask some questions about buying residential real estate (he and his bride got married last December). It is very interesting to listen to them trying to sort out what they want. They are millennials on one hand, and on the other they understand the power of buying real estate as an investment. Their plan (like their parents) is to start by buying something that they can live in for a few years and then turn into a rental. But the Millennial wants and desires keep pulling at them. Let’s examine what these trends for millennials are.
First the stats: From 1999/2000, the net migration of 18-34 year olds to suburbia was 1.9 percent compared to .8 percent for the period 2013-2014. But on top of that, the number of 18-34 year olds has increased from 64 million to 72 million.
This migration change has caused a significant reduction in the percentage of people moving from the city to the suburbs.
Now, if we look at a smaller group, 25-29, they are the most resistant to moving to the suburbs, a decline of nearly 50 percent (see the chart).
As we continued our conversation with our son and his bride, they were looking at moving to the suburbs as a three stage process. First, purchase or rent somewhere near downtown where their jobs are and where they play (i.e. good restaurants, clubs and bars). The second place would be more of a hybrid where they can have a baby but still be around the things they enjoy and not be worried about schools and parks. The third move would be the “family” home where they can find good schools and have more space, the suburbs!!
So what do we need to know about these millennials, where they are creating opportunity and what should be we watching out for?
Demand now and for the next 7-10 years is in the cities and then there will be a migration back out to the suburbs. The question I raise is that since the next coming generation is smaller will the cities become over built in 7-10 years or will the aging population find this attractive because everything is within walking distance? Something to keep an eye on.
In closing, here are the top Twelve Cities where affluent Millennials (making over $350,000 a year) live (there were two ties):
10) Jersey City, NJ
9) Oakland, CA
8) New York City & Washington DC (tied)
7) Cambridge, Mass
6) Denver, CO
5) Pasadena, CA
4) Sunnyvale, CA & Seattle, WA (tied)
3) Huntington Beach, CA
2) San Francisco, CA
1) Arlington, VA
Diana Hill – firstname.lastname@example.org