Latest housing trends reflect larger generational shifts
Wednesday, June 18, 2014
Depending on who you want to believe, Americans either are continuing the recent trend of flocking to the cities or they are starting to migrate back to the suburbs. Both scenarios appear possible according to recent data from the U.S. Census Bureau.
The reason? Improvements in the economy are aligning with major life-stage shifts in the adult population that impact housing choices. In other words, boomers are downsizing, Gen Xers are maturing, and millennials are looking for their first career jobs.
The controversy over the census data boils down to which trend line you choose to emphasize.
As Aaron Betsky points out in a recent post for Architect magazine, if you look at the data in terms of sheer numbers, the major metropolitan areas all continued to grow between July 2012 and July 2013. No area with a population larger than 50,000 experienced a decline in growth, and 14 areas passed the 50,000 mark for the first time.
However, if you look at the data in terms of proportion of growth (i.e., percentage), urban population growth started to slow slightly compared to previous years while suburban areas showed a slight increase.
Improvements in employment figures, consumer confidence and the housing market have helped spur both of these trends. Gen Xers who are more established in their careers and whose children have reached school age are looking to purchase homes in the suburbs — especially those that offer good schools, reliable city services and a high quality of life.
A recent analysis by Builder magazine shows demand for housing is especially high in areas with thriving economies and employment growth, such as the Bay Area, Austin, San Antonio, South Florida, Houston and Las Vegas. The trend might look even stronger, but prospective buyers are stymied by a shrinking pool of affordable homes, high premiums and strict lending standards.
Increased demand for housing has pushed up prices, and baby boomers are starting to recover some of the equity they lost when the bubble burst in 2008. While most boomers will need or prefer to remain in their homes for some time to come, according to a recent report from Fannie Mae, a segment of more affluent boomers is choosing to sell their suburban homes and relocate to urban or ex-urban centers.
The influx of young people into the cities post-recession led to an urban rival that has made them much more attractive to healthy, active, affluent boomers. Once derelict downtowns now offer stylish, secure housing, improved transportation systems and a wide range of amenities, such as trendy restaurants and coffee houses, organic markets, gyms and fitness studios, and cultural destinations and events.
For millennials, city living is both a lifestyle choice and an economic necessity. Millennials' main reason for moving is employment opportunities, and they are especially attracted to high-tech centers like San Francisco, Silicon Valley, Austin-San Antonio, Seattle and Boston.
Financially conservative, highly mobile and not yet ready to marry, they prefer renting to owning, which has created a boom in multifamily housing — up 32 percent on average in the last year, according to the National Association of Home Builders.
Many also are carrying thousands of dollars of student-loan debt along with other forms of debt, from credit cards and car loans. Along with prolonged unemployment and underemployment, these burdens may hamper millennials' ability to own a home for many years to come.
All three generations at present have limited options for various financial reasons. Should the economy begin to gather momentum, however, the current scenario could shift rather suddenly, bringing about a suburban revival and greater generational diversity in urban areas.
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