Are Millennials Starting to Buy Houses in the Burbs?

[Eldon]

For many of us, the idea of turning into our parents is something to be studiously avoided at all cost (no offense, Mom and Dad!). After all, who in their 20s and early 30s wants to be tethered to mortgage payments, bulk shopping trips to Costco and endless backyard barbecues when there are Instagram-worthy places to visit and pricey weekend brunches to be had? At least that’s how the clichés go.

But a recent survey by Ernst & Young indicates millennials may have a lot more in common with their parents than they care to admit, despite the fact your parents may not have a taste for $19 avocado toast...

https://finance.yahoo.com/news/house-spouse-suburban-living-millennials-220523742.html

_____________________________


I'm curious to hear some thoughts on this: are millennials--especially the older ones--really moving away from gentrified urban areas (e.g., Bay View in MKE, Logan Square in Chi) to find places in the burbs?

I was talking to a real estate developer in the western Chi burbs a few weeks ago and he is betting on it bigtime.  In a nutshell, he said to look for suburban transportation-orientated growth to explode, e.g., the real estate near Metra stations in places like Downers Grove, Lisle, etc.  The idea is to mimic the walkability of the urban core, without the congestion, crime, bad schools, etc.  And if walkable burbs don't satiate the need for 'authentic' avocado toast, you're only a quick train ride away.

[GGGG]

This doesn't surprise me in the least. 

[StillAWarrior]

A generation that rails against their parents only to follow in their footsteps?

Impossible!

[warriorchick]

Well, all those millenials are starting to have school-age children.

My millennial sister and her husband recently moved out of their condo in an a trendy part of Denver to a McMansion in the best school district in Tennessee. They both negotiated work from home arrangements with their employers and are now way closer to family.

The amount of money they will be saving on private school tuition for their 3 kids more than makes up for the increase in their mortgage payment.

[Galway Eagle]

Over my dead body could I move to a modern suburb (cookie cutter housing, driveways, everything I hate).

Can't imagine many of my friends in them either though the married ones I know are buying in those type of suburbs like Waukesha, New Berlin, Palatine, Lemont.

[UWW2MU]

Without a doubt this is starting to happen and agreed it is because the group as a whole is finally having children.  Count me in this group.

The only difference though, is that Millennials are going to gravitate to the 'burbs that have a lot more urban amenities than their parents were looking for.  This means high demand for inner ring suburbs.  Milwaukee metro is a perfect case study in this.  Places like Wauwatosa, Shorewood, Whitefish Bay are seeing tremendous value growth and an influx of Millennials.  Meanwhile, more traditional 'burbs like Brookfield and Mequon, that have usually shunned urban style developments, have many projects underway that bring a denser and more walkable nature to their city centers. 

[Galway Eagle]

Without a doubt this is starting to happen and agreed it is because the group as a whole is finally having children.  Count me in this group.

The only difference though, is that Millennials are going to gravitate to the 'burbs that have a lot more urban amenities than their parents were looking for.  This means high demand for inner ring suburbs.  Milwaukee metro is a perfect case study in this.  Places like Wauwatosa, Shorewood, Whitefish Bay are seeing tremendous value growth and an influx of Millennials.  Meanwhile, more traditional 'burbs like Brookfield and Mequon, that have usually shunned urban style developments, have many projects underway that bring a denser and more walkable nature to their city centers.

I agree with this

[Archies Bat]

Well, all those millenials are starting to have school-age children.

My millennial sister and her husband recently moved out of their condo in an a trendy part of Denver to a McMansion in the best school district in Tennessee. They both negotiated work from home arrangements with their employers and are now way closer to family.

The amount of money they will be saving on private school tuition for their 3 kids more than makes up for the increase in their mortgage payment.

We are nearing retirement and have considered getting a condo in Chicago or NY so we can vacation near our millennial kids and enjoy some city time.  While we are now leaning against it, it would have a little irony if we bought one from a millennial moving out to the burbs.

[Plaque Lives Matter!]

Look for smaller cities and towns around the nation to start mimicking the Naperville model.

[GGGG]

Without a doubt this is starting to happen and agreed it is because the group as a whole is finally having children.  Count me in this group.

The only difference though, is that Millennials are going to gravitate to the 'burbs that have a lot more urban amenities than their parents were looking for.  This means high demand for inner ring suburbs.  Milwaukee metro is a perfect case study in this.  Places like Wauwatosa, Shorewood, Whitefish Bay are seeing tremendous value growth and an influx of Millennials.  Meanwhile, more traditional 'burbs like Brookfield and Mequon, that have usually shunned urban style developments, have many projects underway that bring a denser and more walkable nature to their city centers. 

Fast forward 20 years...

[Chili]

Wife (34) & I (39) are coming up on a year in our house we built in Avondale just a few blocks out of Logan Square. We never considered the burbs since we both work in the city. (West Loop & West Town). Most of our friends have also bought houses (Logan, Avondale, Bucktown, North Center) or large condos (Roscoe, West Loop) with only a few going to the burbs. Long commutes are the biggest reason no one wants to go out to the burbs along with access to the city being the positives.

As for development along public transit in burbs - it's already happening in other cities. Just look at Denver & Portland as examples. Both cities are exploding in population and they're building along the public transit routes. Also the collar burbs will continue to do well. I do think the McMansion might devalue quite a bit. 1st off, they're tacky AF with zero design sense. 2nd, it just seems like a big waste.

[dgies9156]

Well, all those millenials are starting to have school-age children.

My millennial sister and her husband recently moved out of their condo in an a trendy part of Denver to a McMansion in the best school district in Tennessee. They both negotiated work from home arrangements with their employers and are now way closer to family.

The amount of money they will be saving on private school tuition for their 3 kids more than makes up for the increase in their mortgage payment.

Sister Chick is right on. The reality is that once you have children, you face the prospect of the Chicago Public School system, where your child either is a genius or you are politically connected or your education is, well, let's just say suspect.

By contrast, my home in a Chicago suburb is in a neighborhood where we have one of the best public school systems in the United States. We pay through the nose for it, yes, but the proof is in the performance. Our system's students are graduated and most do well in college. Children with special circumstances or enhanced needs obtain the support they require to succeed. Students are a person, not a burden to an overpaid, underperforming school system.

Sure, the commute is long, at least on the surface. Mine has been about 1:10 each way. There are neighborhoods in the city where on a bus or a train, it's not much less than that. And, when I board my train, I get a seat. I get two breakdowns a year and the air conditioning works. Late arrivals are measured in single digits and our train stations have heat in the winter. Any CTA rider that claims this for the CTA is either delusional or spreading fake news!

I could go on. Our restaurants are better than they ever have been. Our biggest "crime" is speeding or running red lights. I've lived in our community for almost 25 years and I think we have had all of two murders. Neither was in the village limits. We have lots of green space, a beautiful forest preserve (especially in fall) right outside my back yard, biking, horseback riding, hiking and canoeing all within a mile. Chicago is an hour one way and our beloved Warriors are an hour the other way.

The city has its advantages and as our children leave, we have given some thought to moving to the city. Yes, we could become "our children!" We worry not about the educational system at this point and we'll be a few minutes from everything. If the crime rate is down and the city's government not imploding, maybe this might make some sense.

[DegenerateDish]

Look for smaller cities and towns around the nation to start mimicking the Naperville model.

This is dead on, this whole concept or ideology is just based on Naperville. Naperville is the definition of this and has been since the 80’s.

[Benny B]

As of about 3 years ago, more Milennials wanted to live in the suburbs than Gen Xers at the same point in their life.  IIRC, the simple math was that as many as 8 million Millennials living in cities would rather be living in the suburbs.

[muwarrior69]

I take it that the millennials don't have the student debt that today's grads have. Wonder if that will impact home ownership down the road.

[dgies9156]

I take it that the millennials don't have the student debt that today's grads have. Wonder if that will impact home ownership down the road.

The most significant impact on home ownership has yet to be fully felt. The tax law passed late last year changed the whole homeownership  profile by creating a standard deduction, limiting deductions for property taxes and limiting the amount of interest that is deductible.

In the past, you could generally count on the federal government subsidizing between 28 percent and 39 percent of your home purchase based on favorable tax treatment. They're still there, but the new standard deduction and treatment for housing expenses means there is very little tax benefit to homeownership for many Americans.

When this trend is combined with stagnent home value increases (California and New York being the obvious exceptions), housing isn't the value it used to be. Sure, people will buy homes. But the purchase is more a lifestyle decision than it is an investment. Maybe that's why today's 20 somethings and 30 somethings are waiting!

[tower912]

Well, all those millenials are starting to have school-age children.

My millennial sister and her husband recently moved out of their condo in an a trendy part of Denver to a McMansion in the best school district in Tennessee. They both negotiated work from home arrangements with their employers and are now way closer to family.

The amount of money they will be saving on private school tuition for their 3 kids more than makes up for the increase in their mortgage payment.

You have a millennial sister?

[reinko]

The most significant impact on home ownership has yet to be fully felt. The tax law passed late last year changed the whole homeownership  profile by creating a standard deduction, limiting deductions for property taxes and limiting the amount of interest that is deductible.

In the past, you could generally count on the federal government subsidizing between 28 percent and 39 percent of your home purchase based on favorable tax treatment. They're still there, but the new standard deduction and treatment for housing expenses means there is very little tax benefit to homeownership for many Americans.

When this trend is combined with stagnent home value increases (California and New York being the obvious exceptions), housing isn't the value it used to be. Sure, people will buy homes. But the purchase is more a lifestyle decision than it is an investment. Maybe that's why today's 20 somethings and 30 somethings are waiting!

It's my understanding, this tilted to the wealthier, in high-tax states.  The new cap to deduct on prop taxes is $10K (if you are married, $5K as a single), which on a $750,000 home, in one of the highest taxed areas in the country (Nassau County in NY), is about $10,500 a year.  Same goes for a $450,000 condo in Logan sq (if you are single person), prop taxes for the year around $6500, so you would lose out on $1,500 deduction, not exactly life-altering.  So homes most millennials would buy in 200s, 300s, or 400s K, even if they are single, I would doubt would get impacted by this change.

Same goes for for mortgage interest, $750,000 income cap for married, or $375,000 for single folks...

Now for some I totally agree this new tax sucks in this case, but I doubt many millennials would fall prey to these changes that would impact their decision to buy a home.

[MU B2002]

Well, all those millenials are starting to have school-age children.

My millennial sister and her husband recently moved out of their condo in an a trendy part of Denver to a McMansion in the best school district in Tennessee. They both negotiated work from home arrangements with their employers and are now way closer to family.

The amount of money they will be saving on private school tuition for their 3 kids more than makes up for the increase in their mortgage payment.

Ah, Williamson County.  Great schools.

[GGGG]

I take it that the millennials don't have the student debt that today's grads have.

They do.

[dgies9156]

My millennial sister and her husband recently moved out of their condo in an a trendy part of Denver to a McMansion in the best school district in Tennessee.

Saying you have the best school system in Tennessee is like looking for chateaubriand at a Waffle House.

I'm sure Williamson County is good -- and Brentwood is great -- but other than perhaps Germantown outside Memphis, great school districts at large are few and far between in the State of Tennessee.

[MUfan12]

Having a kid was definitely the factor that changed it for my wife and I. The thought of MPS or paying for private education was enough for us to start the search. If we were childless, I think we'd stay in the city.

The burbs we're looking at are close to the city, though. Even though it's cheaper, the thought of being 40 mins from everything was not appealing.

[warriorchick]

You have a millennial sister?

Yep.  She was born a month before I graduated from high school.  You should have seen the look on my grade-school teacher Sister David's face when I carried her into my brother's 8th-grade graduation ceremony.

[warriorchick]

Saying you have the best school system in Tennessee is like looking for chateaubriand at a Waffle House.

I'm sure Williamson County is good -- and Brentwood is great -- but other than perhaps Germantown outside Memphis, great school districts at large are few and far between in the State of Tennessee.

They are in Brentwood, which has the best non-magnet HS in Tennessee according to USNWR.  It's also ranked higher than any non-magnet public school in the Chicago area except for Stevenson.

You've been away from your home town too long.  Those Southern stereotypes are starting to creep in.

[MU Fan in Connecticut]

The most significant impact on home ownership has yet to be fully felt. The tax law passed late last year changed the whole homeownership  profile by creating a standard deduction, limiting deductions for property taxes and limiting the amount of interest that is deductible.

In the past, you could generally count on the federal government subsidizing between 28 percent and 39 percent of your home purchase based on favorable tax treatment. They're still there, but the new standard deduction and treatment for housing expenses means there is very little tax benefit to homeownership for many Americans.

When this trend is combined with stagnent home value increases (California and New York being the obvious exceptions), housing isn't the value it used to be. Sure, people will buy homes. But the purchase is more a lifestyle decision than it is an investment. Maybe that's why today's 20 somethings and 30 somethings are waiting!

Which is a law that I think is likely to be repealed sooner than later or at the very least the SALT limitation will be eliminated as a result of a budget negotiation.