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Housing the Millennial Generation
Jed Kolko, Independent Economist
The Millennial housing myths
Millennials are fueling housing demand as they move out of their parents’ homes
Millennials have a different attitude toward housing and homeownership
Millennials are especially urban
Outline: the Millennial housing truths
1. Millennials are not driving today’s housing demand
2. Demographics explain Millennial housing behaviors
3. Millennials are less urban than previous generations
Peak age: 24
2455
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,0000 5
10
15
20
25
30
35
40
45
50
55
60
65
70
75
80
85
90
95
100
+
Population by age, June 2015
data source: U.S. Census Bureau
Boomers are driving the increase in households
23
-85
159
-151 -196
391
860
264
-400
-200
0
200
400
600
800
1000
16-19 20-24 25-34 35-44 45-54 55-64 65-74 75+
Household formation, 2014-2015, by age of householder(thousands)
data source: U.S. Census Bureau
Young adults slipped in Q3 2015
Headship rate, 25-34 Living with parents, 25-34
48.0%
48.1%
48.2%
48.3%
48.4%
48.5%
48.6%
48.7%
48.8%
2013 Q3 2014 Q3 2015 Q3
13.8%
13.9%
14.0%
14.1%
14.2%
14.3%
14.4%
14.5%
2013 Q3 2014 Q3 2015 Q3
data source: U.S. Census Bureau
Millennials are still not back to work
data source: Bureau of Labor Statistics
72
74
76
78
80
82
84
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
% employed, age 25-34
Growth will come from Boomers
2% 1%
-3%
8%
13%
-6%
2%
34%
42%
-10%
0%
10%
20%
30%
40%
50%
0-15 16-19 20-24 25-34 35-44 45-54 55-64 65-74 75+
Projected population growth by age group, 2015-2025
data source: U.S. Census Bureau
Outline: the Millennial housing truths
1. Millennials are not driving today’s housing demand
2. Demographics explain Millennial housing behaviors
3. Millennials are less urban than previous generations
Still in Mom & Dad’s basement
24%
25%
26%
27%
28%
29%
30%
31%
32%
% of 18-34 year-olds living in parents’ home
data source: U.S. Census Bureau
How Millennials really are different
49%
20%
0%
10%
20%
30%
40%
50%
60%
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
% of 18-34 year-olds who are married with kids
data source: U.S. Census Bureau
Age at which majority are married or homeowners
25
27
29
31 31 3132 32 32
33 33 33
29
3233 33 33
34
36 3637
3839 39
20
25
30
35
40
1980 1990 2000 2006 2007 2008 2009 2010 2011 2012 2013 2014
Married
Homeowners
data source: U.S. Census Bureau
Demographics explain long-term rise in living at home
24%
25%
26%
27%
28%
29%
30%
31%
32%
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
% 18-34 year-olds living in parents' homeactual vs. adjusted for demographic shifts
baseline = 1994-1999
actual (unadjusted)
demographics-adjusted
data source: U.S. Census Bureau
Demographics explain long-term decline in homeownership
30%
32%
34%
36%
38%
40%
42%
44%
46%
48%
50%
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
Homeownership Rate, 18-34 year-oldsactual vs. adjusted for demographic shifts
baseline = 1994-1999
actual (unadjusted)
demographics-adjusted
data source: U.S. Census Bureau
Outline: the Millennial housing truths
1. Millennials are not driving today’s housing demand
2. Demographics explain Millennial housing behaviors
3. Millennials are less urban than previous generations
Millennials in cities? An urban legend.
% of college-educated 25-34 y.o.’s in hyper-urban neighborhoods
% of all 25-34 y.o.’s
in all urban neighborhoods
10.2%
11.9%
0%
2%
4%
6%
8%
10%
12%
14%
2000 2013
25.6% 25.3%
0%
5%
10%
15%
20%
25%
30%
2000 2013
data source: U.S. Census Bureau
An aging population boosts the suburbs
15%
20%
25%
30%
% living in urban neighborhoods, by age group
2000
2014
data source: U.S. Census Bureau
Metros with fastest millennial growth# Metro Population growth, age 20-34
Cumulative 2010-2014
1 Colorado Springs, CO 13.4%
2 Honolulu, HI 13.3%
3 San Antonio, TX 12.7%
4 El Paso, TX 12.0%
5 Orlando, FL 11.2%
6 Denver, CO 10.5%
7 Seattle, WA 10.1%
8 Houston, TX 10.1%
9 Cape Coral-Fort Myers, FL 9.7%
10 North Port-Sarasota-Bradenton, FL 9.5%
Among large metros
data source: U.S. Census Bureau
Millennials live where Gen Xers did
data source: U.S. Census Bureau
What it means
Since demographics explain Millennial housing behaviors, it’s not attitudes
Household formation and homeownership may have permanently shifted later in life
Housing investments must reflect seniors’ preferences and needs
Absent major policy shifts, there will be plenty of demand for suburban homes
Thank you!
@jedkolko
www.jedkolko.com