In 2010, millennials—numbering some 78.6 million—surpassed baby boomers as the largest demographic cohort in U.S. history. And like the old commercials that claimed “When E.F. Hutton talks, people listen,” generation Y’s needs, preferences, and desires will have a huge impact on almost every facet of the American economy.
In a 2015 ULI Spring Meeting session moderated by former U.S. Secretary of Housing and Urban Development Henry B. Cisneros, panelists introduced two recent ULI-sponsored surveys that reveal new information about what Americans—and especially millennials—want in housing. The findings, which have extensive implications for real estate planners and developers, were then discussed by a panel of gen Y real estate professionals who live and work throughout the United States.
M. Leanne Lachman of Lachman Associates summarized the new ULI report Gen Y and Housing, which updated a 2010 study on the same subject, revealing the impact of the interceding economic recession on millennials’ lifestyles and hopes for the future. The study, coauthored by Deborah L. Brett of Deborah L. Brett and Associates, punctured the myth of millennials living mostly in amenity-rich apartments in the downtowns of large cities. Rather, the study found, many are living in less centrally located but more affordable neighborhoods, and sharing space with parents or roommates to save money. Still, despite their current lifestyle constraints, most are optimistic about the future. The study’s key findings included the following:
* Only 13 percent of millennials live in or near downtowns; 63 percent live in other city neighborhoods or in the suburbs.
* Fifty percent are renters, paying a median monthly rent of $925.
* Twenty-one percent live at home, but 90 percent expect to move out within five years.
* Fourteen percent live in households with three generations of family members.
* Eighteen percent of all millennials and 27 percent who rent share housing with roommates. However, 58 percent of those with roommates would prefer to live alone.
* Virtually all expect to own a home eventually.
* Nine out of ten expect to match or exceed their parents’ economic circumstances.
“Millennials are an intriguing combination of optimism and realism,” Lachman said. “They have high hopes for themselves in the long term, despite having to temper their short-term expectations. Once real adulthood sets in at about 30—which is the new 20—they have a lot of catching up to do, which can be stressful; yet 72 percent report that they are happy, and 74 percent are hopeful.”
Lachman concluded that with the size of the millennial market, developers can offer products targeted to small market segments and still reach large numbers of consumers. With only a quarter of millennials marrying between the ages of 18 and 32, there will be a steady rise in household formation, she predicted.
America in 2015—a new ULI survey of views on housing, transportation, and community—was presented by Stockton Williams, executive director of the ULI Terwilliger Center for Housing, which prepared the report jointly with the Institute’s Building Healthy Places Initiative with support from the Colorado Health Foundation. This survey of about 1,200 adults, broken down by generation, found that many Americans live in communities where they face significant barriers to living a healthy life. A large number of people—particularly minorities and millennials—report living in areas that lack easy access to safe places for outdoor physical activity, bike lanes, and healthy food options.
“Millennials expressed a higher level of dissatisfaction with their communities and local housing options than did [people in] other demographics,” explained Williams. “They say that neighborhoods lack convenient outdoor spaces to run, walk, bike, and exercise. In addition, they believe that both traffic and crime make it unsafe to walk.” More than 60 percent of millennials, he added, want to live in areas where they can use their cars less.
So what do actual millennials have to say about these findings? Gen Y real estate professionals chiming in were Rukiya Eaddy of the Metropolitan Atlanta Rapid Transit Authority; Mitch Hernandez of CBRE; Joe Kennedy and Kristen Nicholson of UDR; and Jeremy Sharpe of Rancho Sahuarita Company.
Said Eaddy: “I’m an example of a millennial who has lived for a decade in small loft in the city because I love the neighborhood and lifestyle. But now I’m getting married, and have been looking for houses for three months. It seems you developers did not expect us to grow up and need more than 1,100 square feet [100 sq m] of living space.”
Nicholson is another young professional who does not want to leave her walkable urban neighborhood in Denver, but who cannot afford to buy what she’s renting. “I live near a large park and I bike almost every day. There’s sense of community here, with people of all ages doing things together. This is important; it roots me to where I am.” Kennedy pointed out that in Manhattan, where he lives, the average price of a condo is $1.1 million. “Lack of affordability is a big factor in millennials’ dissatisfaction,” he said.
As gen Y moves on to later stages of life, which may include marrying and having children, many leave their beloved downtown neighborhoods. That is fine with Sharpe. “In Tucson, we have large master-planned communities, where multiple generations of families grow closer around their children and grandchildren. Our research finds that our residents are most concerned with education, parks and trails, and safety.” And while not everyone is keen on living in the same community as their parents, Hernandez likes to combine living in a walkable community with easy access to a freeway so he can visit his extended family.
With all the focus on millennials, said Cisneros, the industry should not forget that what gen Y wants in housing can benefit people of all ages. He cited a study by the Milken Institute, which notes that from a housing policy standpoint, the best thing to do is to build cities that work for people of all ages.