Millennials are at it again
According to a report by the Wall Street Journal, young adults are bringing new life into the suburbs, mirroring baby boomers — but with a twist.
The housing crisis that is hitting all major cities across the country is pushing millennials to consider their options. As a result, they are fleeing the densely populated urban centers in search of affordable housing. But unlike baby boomers, who also fled to the suburbs for roughly the same reason, millennials are doing so a bit later. Furthermore, they aren’t simply going to the suburbs; they are being selective in their search as well, looking for housing mostly in the Sun Belt region, the Southern and Southwestern portions of the country that stretch from Florida to California, because of both the weather and the business opportunities. As a result, these suburbs are growing twice as fast as neighboring cities.
In search of better jobs and opportunities, millennials are also going outside suburban regions that were once populated by their elders, choosing to revive less densely built locations known as exurbs, or commuter towns, instead of more expensive suburbs that are closer to urban centers.
These main differences indicate that in order to afford to own a home, millennials who are deeply indebted – thanks to their student loans – are looking for homes where older generations wouldn’t dare to go. While this adds to their commute, they are able to afford the cost of homeownership. And as young adults today pay 39 percent more than baby boomers who bought their first homes in the 1980s, it’s clear they have to make adjustments to make ends meet.
Reshaping a Convoluted Housing Market
Millennials entered the housing market under very difficult circumstances, whether they are aware of it or not.
First, they came of age following the collapse of the housing bubble of 2008. Then, the malinvestment undertaken by firms due to the artificially low-interest rates imposed by the Federal Reserve finally came crashing down, hurting countless families across the country.
Later, millennials encountered yet another housing problem, and one that, much like the 2008 crisis, was completely manufactured by the government.
In densely populated areas, where young people go to find gainful employment, local government officials took it upon themselves to restrict the construction of new housing even as demand grew. By passing new zoning laws and doubling down on certain restrictions, officials made things worse for young adults trying to start their lives. And as these policies kept the supply of housing artificially low, millennials started to doubt they could venture into homeownership.
But as millennials grow older and start to have children, they become aware that owning a home is important. Unfortunately, the only way they can afford living the American dream is to move farther from where work is.
This reality is shaping the housing market, as Forbes explains. Now, millennials account for more than one-third of all home purchases, with those born between 1980 and 1989, the so-called older millennials, making up 26 percent of all new homeowners.
And as more millennials transition into family life, they continue to look for better housing opportunities. This, Forbes adds, is why the demand for new housing is growing. And while government officials continue to turn away from calls to change housing policies so that new units are built, millennials will continue to look at suburban regions for affordable housing.
In the meantime, government officials across the country should think long and hard before passing new regulations that would further add to the regulatory burden, making it even harder for young adults to become homeowners.