Millennials and Residential Choice: A Problem for Cities?

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Both the academic and main-stream literature have addressed the apparent differences between the millennial generation (those born between the early 1980s and early 2000s) and other generations. Millennials have grown up in a digital world characterized by rapid change, giving them a set of priorities and expectations different from previous generations, with different preferences and attitudes toward work, leisure and where they live (Goldman Sachs 2016).

Two recent New York Times articles highlight some of the demographic shifts faced by large cities and their millennial residents. In the first, Thomas Fuller reports on the childless urban cores of American cities. With an urban renaissance occurring in many of the continents largest cities, including San Francisco, Chicago, New York and Toronto, high housing prices are common and high rise condominiums have crowded the skyline. Between high housing costs and limited housing space, residents of these downtown areas are less likely to have children. The US Census Bureau, for example, reports that San Francisco has the lowest percentage of children under 18 (13%), well below the share of this cohort in the broader US population (24% in 2010 (US Census Bureau)).  While urban cores and the amenities that they offer are attractive to young adults, what happens when they want to start a family? For many, the preference is to relocate to suburban areas, where better quality schools (in the American instance), lower housing costs, greater green space and more room are strong attractors.

In the second article, Conor Dougherty cautions that the current preference amongst Millennials for living in large urban areas may be fleeting, with cities reaching “Peak Millennial”(Myers, 2016). As millennials age into their child-bearing and family years, they may turn away from the urban core and end up living in the suburbs – the very places that they had moved away from, for the reasons noted above.

What are the implications for cities? We return to the real estate mantra of “Location, Location, Location”. If the growth of millennials in urban cores falters, so does the demand for new housing. Alternatively, suburban housing stocks could gain new value, with the price of these homes increasing.  City budgets, taxation, sprawl, and gentrification will also be affected. But, the devil may also be in the details. Millennials, and their families, could be persuaded to stay if new housing options allow for larger families. Better schools and recreational facilities with services for children could entice millennials to stay. Also, immigration and the movement of empty nesters into urban areas may pick up the supply. Regardless, these trends will play out over the coming years.

Further Reading:

Conor Dougherty, Cities May Be Starting to Run Out of Millennials. New York Times, 24 January 2017, p. A3. Available at: https://www.nytimes.com/2017/01/23/upshot/peak-millennial-cities-cant-assume-a-continued-boost-from-the-young.html?smprod=nytcore-iphone&smid=nytcore-iphone-share

Thomas Fuller. San Francisco Asks: Where Have All The Children Gone? New York Times, 22 January 2017, p A1. Available at: https://www.nytimes.com/2017/01/21/us/san-francisco-children.html?smprod=nytcore-iphone&smid=nytcore-iphone-share&_r=0

Dowell Myers (2016): Peak Millennials: Three Reinforcing Cycles That Amplify the Rise and Fall of Urban Concentration by Millennials, Housing Policy Debate, DOI: 10.1080/10511482.2016.1165722

Goldman Sachs. 2016. Millennials: Coming of Age http://www.goldmansachs.com/ourthinking/pages/millennials/index.html?cid=PS_02_18_07_00_02_15_01

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