Millennials on the Move: Urban-Suburban Divide
Executive Summary
With a population of more than 80 million, Millennials are the largest generation in U.S. history. The sheer size of this age group has the power to reshape markets, similar to their Baby Boomer parents. One key market for the economy that hangs in the balance of Millennials is housing. The hurdles to household formation and homeownership—including record levels of student debt and sluggish income growth—have been widely discussed, but against this backdrop looms the question of where Millennials want to live.Millennials have been frequently been portrayed as preferring urban living relative to prior generations. Forgoing car ownership for ride sharing and public transportation, Millennials have been depicted as wanting to live close to work and amenities such as restaurants and shopping. Some surveys and commentary, however, suggest that they will not stay in the city center forever, and will eventually move out to the suburbs in search of more space and/or less expensive housing.
Using data from the Census Bureau’s Current Population survey, we look at moving trends to see if in fact Millennials are forgoing the suburbs and flocking to the city. We find an increase in the rate at which Millennials are moving into cities, but that the pace still trails the rate at which young adults are moving to the suburbs. In other words, Millennials who move into a different type of area are more likely to move to a suburb than a city. This is particularly true for Millennials in their 30s, where moving rates to the suburbs have picked up noticeably the past three years. The gap between suburban and city moves for younger adults, on the other hand, has narrowed in recent years, indicating preferences are shifting more toward city-living.
One thing that has changed for young adults relative to a decade or so ago is their primary reasons for moving. Today’s young adults are less likely to move in order to get into a better house/apartment or neighborhood. Instead, they are more likely to move in search of cheaper housing or job-related reasons, not unlike older adults following the weak income growth and tight housing credit of recent years. Another clear difference between today’s young adults compared to those at the turn of the 21st century is that Millennials are moving less frequently. This trend is also not unique to young adults, and suggests Millennials’ moving decisions are more reflective of the current economic environment and not a fundamental shift in the way this generation views housing.
Theneed for cheaper housing has likely supported Millennials’ moves to the suburbs. Although the rate at which young adults are moving to cities has picked up in recent years, more are moving to suburbs, which suggests Millennials may not be that different from previous generations of young adults. As indicated by the recent increase in 30-34 year-olds moving rates to the suburbs, once Millennials begin to settle down, their desire for space at an affordable price seems to transcend the generational divide.
