Staying ahead of the real estate demographic curve means keeping your eye on the millennials. They are fueling much of the rental market right now and are expected to become the next biggest group of homebuyers. But where exactly are they headed to rent or to buy?
We’ve seen the headlines for years that the 20 to 30-somethings want to live in the big cities. But a recent report by commercial real estate group CBRE tells a different story.
The group recently published a study that shows that conventional wisdom about millennials flocking to the cities is wrong, and that any millennial mass migration is flowing more toward the suburbs.
CBRE used census data and its own data to measure the flow of millennial migration. And, it shows that the suburbs are not doomed to a decline because of millennial disinterest. But they are, instead, headed for an upswing. And this, of course, has implications for the real estate market.
CBRE decided to dig into the topic of the urban versus suburban lifestyle based on census data. That information shows a total migration of 2.8 million people from the suburbs to cities, while 4.6 million people did the opposite.
CBRE researchers focused on numbers that represent the millennial subset of those figures since they are the largest age group and the largest segment of the U.S. workforce. There’s also much interest among real estate professionals in where they will be spending their money to rent, or to buy homes.
Millennials are thought to be those born between 1980 and 1995. For mid-range millennials, ages 25 to 29 year olds, about 426,000 moved to cities in 2014 while 529,000 moved away.
For the younger ones, 20 to 24 year olds, the flow’s direction was more pronounced. CBRE says that 554,000 moved to cities while 721,000 moved toward the suburbs. It also says that many of those younger millennials were returning to childhood rooms or basements in their parents’ homes. But it says the migration “trend” still holds – that not every millennial wants to live downtown.
For the oldest millennials and the last of the gen x’ers ages 30 to 44, the reverse migration was even greater. 540,000 moved to the cities, while 1.2 million moved to the burbs.
Overall, in 2014, CBRE found that 30% of millennials lived in urban areas, while the other 70% don’t seem to be in a rush to move downtown.
CBRE researchers say the big discrepancy between what is thought to be true and what is true about millennials and where the live, also raises questions about what they are looking for. And, they say it boils down to a combination of “space” and an “urban feel”.
CBRE cites recent surveys that found a desire for three or more bedrooms, and the perks of urban life such as “walkability” and “convenience.” Real estate consultant, Adam Ducker, told the Curbed publication that millennials want to be able to walk to shopping and dining, and make use of mass transit.
There are even new terms that describe these new quasi-urban areas as “hipsturbia” and the “urban burbs”.
CBRE says the implications of this data are clear, that the U.S. population will not condense into U.S. cities anytime soon. In fact, CBRE says that suburbs are alive and doing quite well.
It also says that the narrative varies for different markets across the U.S. It says there are some urban cores that are outperforming their outlying areas.
The take-away is that each market has its own dynamic that will play out in unique ways. CBRE says, “While there is some truth to the idea of the resurgent urban core, it is also fair to say that the death of the suburbs and millennials’ love of cities have been greatly exaggerated.”
Here at RealWealth, we love millennials and we love tracking areas where they might thrive just outside the big cities. We focus on several up-and-coming markets where you can buy cash-flowing single-family rentals that would appeal to millennials.