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Millennials ARE buying! And their buying local!
SAN DIEGO – March 13, 2017 – At 24 years old, Bre Hataishi wants a house. For now, the preschool teacher rents a one-bedroom apartment in San Diego's South Park neighborhood with her boyfriend, but only because their income is far too low for them to buy a home.
When the time comes, they have little interest in the hundreds of condos being built in downtown San Diego – or in condos anywhere else, for that matter.
"We definitely want a house because we want to have dogs," she said. "And kids someday."
Hataishi's hopes aren't far off from her peers'. A recently released pair of studies suggest that the majority of millennials – the oldest of whom are about 35 – want to live in the suburbs, have already started buying outside urban areas and base their homebuying decisions mainly on affordability.
Reports by Zillow and Harvard University break with stereotypes of America's largest generation, namely that they prefer to rent because they favor experiences over building equity and want to live in urban environments.
Millennials make up about 10 percent of the nation's homeowners. Nearly half of those were in the suburbs in 2016, 33 percent in urban areas and 20 percent in rural places, said Zillow's Group Report on Consumer Housing Trends. The report used U.S. census data and a Zillow survey of more than 13,000 home buyers, sellers, owners and renters.
Of millennial buyers who moved in the last year, 64 percent stayed in the same city and just 7 percent moved to a different state, the Zillow study said.
The Harvard study by its Joint Center for Housing Studies – which used data from the census and the Department of Housing and Urban Development as well as its own analysis – found most stereotypes associated with millennial homebuyers were not true.
It said among the misconceptions were that millennials want to live in urban locations closer to employment, commercial and social centers; prefer the flexibility of renting; and are unwilling to take on the financial risks of ownership in the wake of the housing market collapse.
"The evidence suggests, however, that homeownership decisions by younger households have much more to do with affordability than location and lifestyle preferences," study authors said.
The Harvard study found homeownership rates for millennials were 5 percent higher in metro areas where median home prices were 20 percent below the national median. The idea was that if millennials could afford to buy a home, they would, and did so in low-cost markets such as Detroit, Minneapolis and St. Louis.
The Zillow survey found that millennials were more likely to associate homeownership with the American dream than Generation X or baby boomers were.
But nationally, homeownership isn't looking too great for millennials, compared with past generations. In 2015, the homeownership rate for the under 35-year-old population hit an all-time low of 31 percent, according to the census. That's down from 43 percent in 2005, the Harvard study said.
According to recent studies, the majority of millennials – the oldest of whom are about 35 – want to live in the suburbs, have already started buying outside urban areas and base their home-buying decisions mainly on affordability.