Older millennials leave big cities and move to the suburbs

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Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes

6y

Originally posted by @Tom De Napoli:

The location preferences of young adults hold large consequences for real estate investors. The trend for the past 10+ years has been that the millennial generation (those born between 1981 and 1996) are opting to live in cities more than previous generations and have a strong preference for its amenities such as its walkable access to retail, entertainment, recreation, restaurants and of course employment. However, that trend is starting to shift.

Cities with more than a half million people lost 27,000 residents age 25 to 39 in 2018. While this number is quite small relative the total number of people in this demographic, it is a trend that has persisted in the last four years and is a reversal from the four years immediately following the recession. This drop was driven by residents between the ages of 35 and 39 leaving the city for the surrounding suburbs, which is consistent with historic patterns of families leaving cities for more space and better schools, but remaining within the metro area. Millennials are moving to the suburbs, they're just doing it later than previous generations because they are forming families later.

As the millennial generation follows the pattern of migrating to the suburbs set by their parents and grandparents, how are members of the Bigger Pockets community preparing to supply that demand with housing options that are tailored for the needs and tastes of this group?

I completely predicted this years ago. The reality is that once people decide to get married and have a family, their priorities change. I couldn't see any reason that a millennial would be different. We have invested in single family homes in good neighborhoods. Three or four bedroom, two bath, two car garage, fenced back yards and close to elementary schools. That is where families want to live. We have had some millennial without kids live in our properties too. People get tired of the high density of an urban setting. Noise, people, etc. can get old. And our single millennial have dogs that enjoy a fenced yard.

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Erik W.

Real Estate Investor · Springfield, MO · Member since 2017 · 1k+ posts · 2k+ votes

6y

Been hearing a lot about this lately. That which is trendy today will be old-fashioned tomorrow and trendy again the day after. As the world turns, each generation realizes they are less "unique" than they thought they were, compared to the previous generations. Some take longer than others to adopt their parents' / grandparents' priorities, but at some point the bloom starts to fall off the rose of being "trendy' and you settle into the lifestyle and patterns that have been with us since the dawn of the Industrial Revolution.

I'm mid-40s now, so I've seen my own generation and the millennials both pass thru these cycles, although Xers (me!) never were much into "big city" living. That was most for our hipsters and yuppies. We like having lawns to obsess over like our boomer parents. And wet bars & man caves. I think Gen X perfected--if not invented--the man cave.

It'll be really interesting to see what happens to all the "sharing" economy stuff once the younger millenials and Gen Z finally hits these milestones in 10-20 years. Will it stand the test of time, or pass like so many other fad? *shrugs Life sure is interesting. I can see why older folks used to like sitting on their front porches and just watch the world: it's endlessly entertaining.

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Tom De Napoli

OP

Investor · New York, NY · Member since 2019 · 31 posts · 20 votes

6y

Thanks for your reply, Joe. My partner has a similar outlook to yours. We began studying millennial migration to the suburbs 2 years ago -- he really walks the walk and made the move while I continue to live in the city -- and as a result we expanded our strategy of investing in metro area multifamily properties to also focus on suburban neighborhood retail.

Have you found any differences between the types of features, amenities or services that your millennial tenants in single family homes require in comparison to those of other generations or is it mainly apples to apples?

Originally posted by @Joe Splitrock:

Originally posted by @Tom De Napoli:

The location preferences of young adults hold large consequences for real estate investors. The trend for the past 10+ years has been that the millennial generation (those born between 1981 and 1996) are opting to live in cities more than previous generations and have a strong preference for its amenities such as its walkable access to retail, entertainment, recreation, restaurants and of course employment. However, that trend is starting to shift.

Cities with more than a half million people lost 27,000 residents age 25 to 39 in 2018. While this number is quite small relative the total number of people in this demographic, it is a trend that has persisted in the last four years and is a reversal from the four years immediately following the recession. This drop was driven by residents between the ages of 35 and 39 leaving the city for the surrounding suburbs, which is consistent with historic patterns of families leaving cities for more space and better schools, but remaining within the metro area. Millennials are moving to the suburbs, they're just doing it later than previous generations because they are forming families later.

As the millennial generation follows the pattern of migrating to the suburbs set by their parents and grandparents, how are members of the Bigger Pockets community preparing to supply that demand with housing options that are tailored for the needs and tastes of this group?

I completely predicted this years ago. The reality is that once people decide to get married and have a family, their priorities change. I couldn't see any reason that a millennial would be different. We have invested in single family homes in good neighborhoods. Three or four bedroom, two bath, two car garage, fenced back yards and close to elementary schools. That is where families want to live. We have had some millennial without kids live in our properties too. People get tired of the high density of an urban setting. Noise, people, etc. can get old. And our single millennial have dogs that enjoy a fenced yard.

0 Reply

Tom De Napoli

OP

Investor · New York, NY · Member since 2019 · 31 posts · 20 votes

6y

I'm an Xer who definitely falls into a hybrid hipster/yuppie category having moved to Brooklyn in the early OO's as a creative and, after business school transformed into an executive. I love living in the city, but it is undeniable that as friends in my neighborhood start families, the vast majority move to the suburbs as their kids reach elementary school age for convenience (it's a lot easier to drive to the grocery store and park, than carry your bags home on the subway or pay $10 for a Lyft), stability, and good public schools (private elementary in NYC can run upwards of $20K per kid or more per year).

However, I'm curious to see how this generation which has more debt, flatter earnings and less desire for big homes reshapes the face of suburban single family housing and main street areas.

Originally posted by @Erik W.:

Been hearing a lot about this lately. That which is trendy today will be old-fashioned tomorrow and trendy again the day after. As the world turns, each generation realizes they are less "unique" than they thought they were, compared to the previous generations. Some take longer than others to adopt their parents' / grandparents' priorities, but at some point the bloom starts to fall off the rose of being "trendy' and you settle into the lifestyle and patterns that have been with us since the dawn of the Industrial Revolution.

I'm mid-40s now, so I've seen my own generation and the millennials both pass thru these cycles, although Xers (me!) never were much into "big city" living. That was most for our hipsters and yuppies. We like having lawns to obsess over like our boomer parents. And wet bars & man caves. I think Gen X perfected--if not invented--the man cave.

It'll be really interesting to see what happens to all the "sharing" economy stuff once the younger millenials and Gen Z finally hits these milestones in 10-20 years. Will it stand the test of time, or pass like so many other fad? *shrugs Life sure is interesting. I can see why older folks used to like sitting on their front porches and just watch the world: it's endlessly entertaining.

0 Reply

Joe SplitrockPro Member

Moderator

Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes

6y

Originally posted by @Tom De Napoli:

Thanks for your reply, Joe. My partner has a similar outlook to yours. We began studying millennial migration to the suburbs 2 years ago -- he really walks the walk and made the move while I continue to live in the city -- and as a result we expanded our strategy of investing in metro area multifamily properties to also focus on suburban neighborhood retail.

Have you found any differences between the types of features, amenities or services that your millennial tenants in single family homes require in comparison to those of other generations or is it mainly apples to apples?

Originally posted by @Joe Splitrock:

Originally posted by @Tom De Napoli:

The location preferences of young adults hold large consequences for real estate investors. The trend for the past 10+ years has been that the millennial generation (those born between 1981 and 1996) are opting to live in cities more than previous generations and have a strong preference for its amenities such as its walkable access to retail, entertainment, recreation, restaurants and of course employment. However, that trend is starting to shift.

Cities with more than a half million people lost 27,000 residents age 25 to 39 in 2018. While this number is quite small relative the total number of people in this demographic, it is a trend that has persisted in the last four years and is a reversal from the four years immediately following the recession. This drop was driven by residents between the ages of 35 and 39 leaving the city for the surrounding suburbs, which is consistent with historic patterns of families leaving cities for more space and better schools, but remaining within the metro area. Millennials are moving to the suburbs, they're just doing it later than previous generations because they are forming families later.

As the millennial generation follows the pattern of migrating to the suburbs set by their parents and grandparents, how are members of the Bigger Pockets community preparing to supply that demand with housing options that are tailored for the needs and tastes of this group?

I completely predicted this years ago. The reality is that once people decide to get married and have a family, their priorities change. I couldn't see any reason that a millennial would be different. We have invested in single family homes in good neighborhoods. Three or four bedroom, two bath, two car garage, fenced back yards and close to elementary schools. That is where families want to live. We have had some millennial without kids live in our properties too. People get tired of the high density of an urban setting. Noise, people, etc. can get old. And our single millennial have dogs that enjoy a fenced yard.

Honestly people are people. Generations at the core people want the same thing, which is a safe neighborhood and feeling of community. I do see some trends:

- Both GenX and Millenial are technology savvy, so we do focus on technology to run our business. Using electronic rent payment, electronic lease signing, social media, texting, etc.

- Pets are getting more common, so fenced yards for dogs are huge.

- Millenials require way more validation and praise. I get pictures text to me showing me how they fixed up the property. Look we pruned the push and I get a picture. Older generations just randomly do things and never tell me, but millenials always have to show me their good work. I just say "good job" and move on.

2 Reply

Tom De Napoli

OP

Investor · New York, NY · Member since 2019 · 31 posts · 20 votes

6y

Those are all great insights, Joe. The third one was particularly interesting and similar to what we see in the workplace as well.

Thanks,

Tom

Originally posted by @Joe Splitrock:

Originally posted by @Tom De Napoli:

Thanks for your reply, Joe. My partner has a similar outlook to yours. We began studying millennial migration to the suburbs 2 years ago -- he really walks the walk and made the move while I continue to live in the city -- and as a result we expanded our strategy of investing in metro area multifamily properties to also focus on suburban neighborhood retail.

Have you found any differences between the types of features, amenities or services that your millennial tenants in single family homes require in comparison to those of other generations or is it mainly apples to apples?

Originally posted by @Joe Splitrock:

Originally posted by @Tom De Napoli:

The location preferences of young adults hold large consequences for real estate investors. The trend for the past 10+ years has been that the millennial generation (those born between 1981 and 1996) are opting to live in cities more than previous generations and have a strong preference for its amenities such as its walkable access to retail, entertainment, recreation, restaurants and of course employment. However, that trend is starting to shift.

Cities with more than a half million people lost 27,000 residents age 25 to 39 in 2018. While this number is quite small relative the total number of people in this demographic, it is a trend that has persisted in the last four years and is a reversal from the four years immediately following the recession. This drop was driven by residents between the ages of 35 and 39 leaving the city for the surrounding suburbs, which is consistent with historic patterns of families leaving cities for more space and better schools, but remaining within the metro area. Millennials are moving to the suburbs, they're just doing it later than previous generations because they are forming families later.

As the millennial generation follows the pattern of migrating to the suburbs set by their parents and grandparents, how are members of the Bigger Pockets community preparing to supply that demand with housing options that are tailored for the needs and tastes of this group?

I completely predicted this years ago. The reality is that once people decide to get married and have a family, their priorities change. I couldn't see any reason that a millennial would be different. We have invested in single family homes in good neighborhoods. Three or four bedroom, two bath, two car garage, fenced back yards and close to elementary schools. That is where families want to live. We have had some millennial without kids live in our properties too. People get tired of the high density of an urban setting. Noise, people, etc. can get old. And our single millennial have dogs that enjoy a fenced yard.

Honestly people are people. Generations at the core people want the same thing, which is a safe neighborhood and feeling of community. I do see some trends:

- Both GenX and Millenial are technology savvy, so we do focus on technology to run our business. Using electronic rent payment, electronic lease signing, social media, texting, etc.

- Pets are getting more common, so fenced yards for dogs are huge.

- Millenials require way more validation and praise. I get pictures text to me showing me how they fixed up the property. Look we pruned the push and I get a picture. Older generations just randomly do things and never tell me, but millenials always have to show me their good work. I just say "good job" and move on.

0 Reply

Justin Gottuso

Rental Property Investor · Columbus, OH · Member since 2015 · 184 posts · 162 votes

6y

Thanks for the post and posing the question @Tom De Napoli! My wife and I spent the last 7 years of our lives in Los Angeles and the last 4 in pricey west los angeles. With our daughter 2.5 years old now and another on the way, we are moving to Columbus, Ohio (where my wife is from and has family). Lot's of Millennials/friends of mine have also left LA altogether, not just 'moving to the suburbs.' The ones that stay come from very wealthy families or earn over 300k per year combined. 1200 sq ft for 4k per month is not the life we want for our family, and many other Millennials are moving to the Midwest and other places like Florida for quality of life reasons. The suburbs in Columbus, and just about every other suburb in large cities, have not been built with Millennial's in mind. The closest thing I see are luxury apartment complexes with a zillion amenities and super high HOA fees, but this caters to people who are single and in their 20's, not people with families. Then flippers come along and transform older properties into high tech modern pieces of art - that are really expensive (at least that's what happens in LA). I think suburbs could use re-development vision like transforming old/under-used malls from the 70's and 80's in suburbs into cool community centers. @Joe Splitrock made a great point of Millennial's valuing fences for dogs. Dog parks are also valuable. I'd like to see more linking of suburb communities via social media/technology too. NextDoor is mostly neighborhood watch types, but I'd like more intentional community building/social activities that would bring people together. Not just big events but local ones like neighborhood Master Chef like cook off's that are live streamed and have our friends in other parts of the U.S. participating where they are (or other festivals, sports watch parties etc) so people meet their neighbors and have a sense of belonging. So, a linking of the built/physical space of properties/planning with the social space of people with some mediation via technology.

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Tom De Napoli

OP

Investor · New York, NY · Member since 2019 · 31 posts · 20 votes

6y

@Justin Gottuso

Thanks for the reply and congrats on your pending move to Columbus, which is beginning heavily featured on many superlative lists of places for millennials to live. My full-time job is in media and I have several LA-based colleagues facing the same issues about housing costs as you. I’m also married to a mid-westerner and keep an eye on prices in her hometown.

Full disclosure, my partner and I have expanded our investment focus from Denver multifamily to New Jersey suburban neighborhood retail precisely because we see demand in transforming many aspects of suburban life, including retail, for the millennial migration that’s underway. Research and data show that the housing stock in the suburbs is old and in short supply, but it really becomes apparent when we drive those markets. I have not yet seen a lot of new development, but based on calls to local contractors to survey them about their availability, and the growth in share prices of stocks for home improvement stores like Home Depot, we’re definitely seeing a trend towards fixing up existing inventory on those markets that will probably last until new building starts — again, that’s specific to the submarkets we are focused on.

1 Reply

Remington LymanBusiness Member

Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes

6y

Originally posted by @Justin Gottuso:

Thanks for the post and posing the question @Tom De Napoli! My wife and I spent the last 7 years of our lives in Los Angeles and the last 4 in pricey west los angeles. With our daughter 2.5 years old now and another on the way, we are moving to Columbus, Ohio (where my wife is from and has family). Lot's of Millennials/friends of mine have also left LA altogether, not just 'moving to the suburbs.' The ones that stay come from very wealthy families or earn over 300k per year combined. 1200 sq ft for 4k per month is not the life we want for our family, and many other Millennials are moving to the Midwest and other places like Florida for quality of life reasons. The suburbs in Columbus, and just about every other suburb in large cities, have not been built with Millennial's in mind. The closest thing I see are luxury apartment complexes with a zillion amenities and super high HOA fees, but this caters to people who are single and in their 20's, not people with families. Then flippers come along and transform older properties into high tech modern pieces of art - that are really expensive (at least that's what happens in LA). I think suburbs could use re-development vision like transforming old/under-used malls from the 70's and 80's in suburbs into cool community centers. @Joe Splitrock made a great point of Millennial's valuing fences for dogs. Dog parks are also valuable. I'd like to see more linking of suburb communities via social media/technology too. NextDoor is mostly neighborhood watch types, but I'd like more intentional community building/social activities that would bring people together. Not just big events but local ones like neighborhood Master Chef like cook off's that are live streamed and have our friends in other parts of the U.S. participating where they are (or other festivals, sports watch parties etc) so people meet their neighbors and have a sense of belonging. So, a linking of the built/physical space of properties/planning with the social space of people with some mediation via technology.

Welcome to Columbus!

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James CarlsonBusiness Member

Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes

6y

@Tom De Napoli

Great post with some great links and backup info. We are certainly seeing this in Denver. While people seem to be moving everywhere in Denver, we have had a number of buyer clients looking in the suburbs like southeast Aurora, Castle Rock and up north in Arvada and Westminister and those are the deals that are seeing multiple offers, over-asking offers, and other bells and whistles like appraisal gap coverage and waiving of inspections.

Not that this is a big driver of the dynamic, but we work with a lot of young house hacking clients, and they want a 5br house to squeeze out as much revenue as possible. You don't find affordable big homes in the city. They're in the 'burbs.

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Tom De Napoli

OP

Investor · New York, NY · Member since 2019 · 31 posts · 20 votes

6y

@James Carlson

Thanks for the reply. My partner and I are big believers in the continued, sustained growth of the Denver metro area. We started syndicating multifamily deals in Lakewood in 2015 and have similarly cast our search into first and second ring suburbs around the region.

Have a great weekend and get in some runs at A-Basin for me!

1 Reply

Justin Gottuso

Rental Property Investor · Columbus, OH · Member since 2015 · 184 posts · 162 votes

6y

@Tom De Napoli

Hey Tom!

Yeah, Columbus is cool and are on those superlative lists that I’ve read about. Something I haven’t seen on those list as much is the fact that Columbus is ranked number two in the United States for quality-of-life indicators. Raleigh North Carolina is number one. Which is where my sister and brother-in-law moved to a year ago ha ha. But on the ground the majority people don’t make moves just based on economic growth potential alone, relationships, especially family make a huge impact in our decisions and desires. I’m just grateful my wife’s family happen to be from a cool college town in the Midwest with lots of things going for it now and in the future. Really stoked about the possible hyper loop between Pittsburgh, Columbus and Chicago!

Being from LA I was actually the one who for many years kept telling my wife, “why don’t we move to Columbus?“ it wasn’t until she reached a certain mile stone in her career, experiencing a sour moment at her “perfect“ company they started to doubt the long-term viability of sticking with the organization, and then being back for the holidays a couple months ago and our 2 1/2-year-old daughter playing with her cousins like they were brothers that got us seriously thinking about the move. The stars aligned and I was offered an amazing job at Ohio State University medical center and she was able to work out a flex schedule with her employer, plus consultation with friends and family as well as prayer and spiritual guidance that finally let us to decide “yes, let’s move!”

3 Reply

Mark H. Porter

Investor · SC NC, VA · Member since 2020 · 1k+ posts · 756 votes

6y

This also effects the rental market by increasing the demand for a longer period of time than on the past. Hence, the shortage of existing units. Of course, it’s the landlords fault.

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Anthony Angotti

Real Estate Agent · Pittsburgh, PA · Member since 2015 · 1k+ posts · 846 votes

6y

@Tom De Napoli our strategy is to focus on neighborhoods in the suburbs with walkable main streets and easy access to public transportation. I've found that at least in Pittsburgh, the main street with at least 10-20 shops is a big plus. People like local watering holes and restaurants/coffee shops that they can walk to. Additionally having good access to public transportation is a plus because you get tenants who like the easy commute into the city, but don't want to live among the crowded downtown area.

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Older millennials leave big cities and move to the suburbs

Older millennials leave big cities and move to the suburbs

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