Where millennials want to live might surprise you
'Where millennials want to live might surprise you' Author: Phillip Molnar; Posted on 03/02/2017. Retrieved on 03/03/2017 at https://www.sandiegouniontribune.com/business/real-estate/sd-fi-millennial-study-20170302-story.html
Even at 24 years old, preschool teacher Bre Hataishi has her eyes set on a house.
For now, she rents a one-bedroom apartment in South Park with her boyfriend, but only because their income is nowhere near what they need to purchase.
When the time comes, the couple has little interest in the hundreds of condos being built in downtown San Diego, or 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 pair of studies released this week suggests that the majority of millennials 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 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.
Such preferences could have an impact in San Diego, which has one of the biggest concentrations of millennials in the nation yet has moved away from building single-family homes to apartments and condos.
Millennials only make up roughly 10 percent of the nation’s homeowners (the oldest millennials are about 35 years old). The majority who have made the leap decided to follow in the footsteps of their parents and grandparents.
Nearly 50 percent of millennial U.S. homeowners were in the suburbs in 2016, 33 percent in an urban area and 20 percent in rural places, said Zillow’s Group Report on Consumer Housing Trends. The report used Census data and a Zillow survey of more than 13,000 homebuyers, sellers, owners and renters.
Of millennial buyers who moved in the past 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, U.S. Housing and Urban Development and its own analysis — found most stereotypes associated with millennial homebuyers were not true.
It said among the misconceptions were that millennials wanted to live in urban locations closer to employment, commercial, and social centers; prefered the flexibility of renting; and were 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 if millennials could afford to purchase a home, they would, and did so in low-cost markets like Birmingham, Detroit, Minneapolis and St. Louis.
The Zillow survey found millennials were more likely to associate homeownership with the “American Dream” than Generation X or baby boomers.
San Diego County has been moving away from single-family homes for more than a decade. During the housing boom, 9,555 single-family permits were issued in 2004. But after the bubble burst, that number ped to 1,786 in 2009.
From 2011 to 2015, builders averaged 2,470 single-family permits a year and 4,815 for multifamily.
Local consultants London Group Realty Partners, in a report last summer, criticized the region’s focus on condos and apartments, arguing that millennials would want houses as they come of age.
Nathan Moeder, London Group principal, said Wednesday that a reason for fewer single-family homes is lack of buildable land. His firm identified 47,509 acres of farmland considered inferior by the state Department of Conservation that London Group said could be used for housing.
Moeder said the difficulty for developers is finding land that will not face community and environmental opposition, as well as stringent criteria in government general plans.
To be fair, planners don’t exactly have a clear path forward in San Diego. Even with a ton of millennials boosting theoretical demand for housing, there is no significant indication that affordability constraints will ease.
The San Diego region has the second-highest concentration of millennials of any metro area in the nation (Austin is first), said JLL Research.
Yet many young folks have hightailed it out of town. San Diego County had one of the smaller millennial population increases in the nation from 2005 to 2015 out of the 50 largest metros, said a study from Apartment List Rentonomics. The report found the biggest reasons why millennials settled somewhere were wage growth and affordability.
The county had the second-biggest millennial homeownership rate among the 50 metros, sinking 8 percent in the decade studied by Apartment List. It had a 19.8 percent millennial ownership rate in 2015.
Nationally, homeownership isn’t looking too great for millennials compared to past generations. In 2015, the homeownership rate for the under 35-year-old population hit an all-time low of 31 percent said the U.S. Census — down from 43 percent in 2005, the Harvard study noted.
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