For generations, owning your own home has been a part of the American Dream. Millennials are now at the age when people have traditionally bought their first house. But many young people are finding home ownership to be a dream deferred. Millennials represent roughly 76 million people between the ages of 18 to 36, but only 36% of them own a home. This compares to 65% of the older U.S. population who are homeowners.1
Do Millennials simply prefer the buzz of the city rather than the comforts of suburban life? Sure, plenty do. “As founders of the social media movement, they’re never more than a few clicks away from friends and family. And offline, they prefer to live in dense, diverse urban villages where social interaction is just outside their front doors.”2
But this observation hasn’t played out in a wave of recent studies. Indeed, as Millennials get older, they may not “prefer” the urban life at all, but feel trapped in it. Here’s where Millennials would prefer to live, according to a recent survey by the National Association of Home Builders:
And here’s why Millennials want to move on to different lodging, according to a recent survey by the Demand Institute.
That could be good news for our nation’s 70 million baby boomers, especially the empty nesters who’d love to downsize from their suburban homes. Could it be that these baby boomers have a ready market in Millennials eager to buy those single-family homes? Not so fast.
Whether Millennials want to live in a suburb, small town or city, they also want some perks associated with the city: to live in a walkable community, with great schools, parks, places to bike, public transportation options -- all within a short drive to shops, stores and restaurants. These characteristics are not found in many of the traditional suburbs where downsizing baby boomers own homes. But today, many city planners and architects have recognized these Millennials' preferences and are incorporating urban design principles to enhance suburbs.
Meanwhile, 92% of Millennials who do not currently own a home plan to do so in the future.3 However, three big reasons hold them back: inability to secure a high-paying job in the burbs, today’s tough mortgage-lending standards and the burden of carrying a hefty student loan. Many young people simply don’t have enough money saved up to pay a home down payment, let alone moving costs.4
But the good news is this economic situation is projected to end by 2017, according to the Demand Institute. If these projections prove true, the number of Millennials financially trapped in the city or living with their parents is expected to decrease. They’ll then be able to find decent jobs and kick-start their careers in the suburbs or elsewhere.
Yet until this economic recovery, many Millennials will continue to live in a big city – whether or not they genuinely prefer it.