Millennials are expected to move out of the city and into the suburbs. While many will choose to rent in urban areas, but when they are ready to buy, they will seek single-family homes outside urban areas.
The 2016 National Association of Realtors Home Buyer and Seller Generational Trends study reported the average age of a millennial home buyer is at 30 years old. This is the expected time in life when one settles down to raise a family. Lawrence Yun, NAR's chief economist stated that even if an urban setting is where they will buy their first home, the need for space at a cheaper price will push their search further outside city limits.
Furthermore, minimal inventory in price ranges, limited entry level condominiums, and affordability pressures will make buying in the city difficult for many young households.
CNBC featured that millennials who purchased homes in urban or central city areas dropped to 17 percent in this year's survey, which is down from 21 percent the year prior. Also, only 10 percent of millennials bought a multifamily home, which is down from 15 percent a year ago,
Millennials make up the largest group of home buyers at 35 percent, which trumps the 31 percent of boomers, 26 percent of generation X, and 9 percent from the Silent Generation. According to Realtor.com, when it comes to choice of neighborhood, millennials were most swayed by the quality of the neighborhood at 63 percent, and convenience to jobs at 60 percent. On the other hand, Gen X buyers were most influenced by convenience to schools locations.
Millennials, however, still face the issue of low supply of homes in suburban areas. It is particularly critical at the low end, where millennials are likely to buy. Homebuilders are not focused on smaller homes and first time buyers because it is more difficult to make a profit in those segments.
