Not all millennials live in cities. Nearly 50% live in the suburbs and 20% live in rural areas, with the remaining 33% inhabiting urban centers, according to data from Zillow’s Group Report on Consumer Housing Trends, which polled 13,000 U.S. residents between the ages of 18 and 75 about their housing profile.
What’s more, roughly two-thirds of millennial homebuyers who moved in the last year stayed in their current city of residence. Millennials made up 42% of homebuyers in 2016, the largest generational share for that year.
- The median first-time homebuyer was 33 years old in 2016. The median home purchased by millennial buyers last year was roughly 1,800 square feet — larger than the typical starter home — and cost $217,000.
Headlines suggest that millennials are flocking to cities replete with luxury apartments whose competitive amenities and walkability to key resources, including work, earn these young professionals' rent checks each month. The reality is more nuanced, and Zillow’s latest report offers more details on where millennials are renting and owning homes.
The findings line up with those from a December 2016 study by the Urban Land Institute’s Terwilliger Center for Housing, which noted that millennials are moving to the suburbs in growing numbers in a bid to find lower-cost housing that’s still close to employment centers as housing prices across many metros propel upward.
Especially when it comes to purchasing a home, millennials are likely to eschew high-profile urban cores in favor of suburbs where a larger volume of entry-level homes can be found. The National Association of Realtors reported last year that the share of millennials purchasing a home in a city center fell to 17% in 2016 from 21% in 2015.
With existing inventory at the lower end of the market staying tight for the foreseeable future, builders are responding with new construction initiatives that aim to fill the gap.
In February, Atlanta-based builder Ashton Woods announced a line of new-home communities, Starlight Homes, targeting millennials with monthly payments from the mid-$800s to the low-$1,000s.
Starlight joins Meritage Homes’ LiVE.NOW. product line, which launched in October, and Toll Brothers’ T|Select category, which rolled out in January, among others. Both feature streamlined plans and were introduced in communities with strong entry-level components, including Houston.
Townhouse construction is also on the rise, a trend credited to growing demand among first-time buyers for lower-cost, smaller properties close to transit and job centers. Recent figures from the National Association of Home Builders show that starts in the category jumped 12.8% year-over-year to 97,000 in 2016.
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