Ask even a casual observer of cities and the shifting fortunes of urban America, and regardless of their viewpoint, they’ll probably agree that millennials love cities. This sizable demographic—roughly 83 million Americans born between 1980 and 1999, a group bigger than the Baby Boomers—may be one of the most diverse in history, but overwhelmingly, according to conventional wisdom, they favor life downtown, and have helped, and will help, the continued resurgence of big cities.
But as a new study argues, presence does not suggest preference, especially over the long term. The demographic's current love of urban living is, in part, the result of a three trends converging over the last decade or so that are now simultaneously breaking away from increased urban living.
According to Professor Dowell Myers, the millennial trend towards moving downtown has not only peaked, but did so last year, meaning we’re at the beginning of a shift towards deconcentration, not density. In his paper "Peak Millennials: Three Reinforcing Cycles That Amplify the Rise and Fall of Urban Concentration by Millennials," he argues cities will see less and less young adult residents over time, and doesn’t believe the next generation will pick up the slack.
Myers admits recent evidence has't shown tremendous evidence for this shift, but he believes the chart below, which shows a revival of suburban migration, foreshadows a growing trend.
A professor at the Sol Price School of Public Policy at the University of Southern California, Myers uses a "bathtub model" to explain the current millennial housing situation. It's basically pent-up demand keeping everyone downtown. Cities are about to exit an extended period of accelerated inflow and clogged outflow, caused by the following factors: Millennials came to, and crowded in, cities to find work in a depressed, post-Recession economy; depressed housing construction and lack of savings meant the number of available single family homes had declined (and wasn’t as affordable), and the diversion of potential homeowners into the rental market has slowed household formation; and finally, a boom in births had led to growing competition for entry-level housing and jobs. After arriving downtown, the economy and housing situation kept young adults from moving away.
Now, the largest group of millennials, in terms of births per year, has passed age 25, meaning less competition for jobs and housing for young adults, and the beginnings of a demographic shift. A stronger economy and more job growth means more opportunities in more places. These both contribute to demand for new construction and an opening up of the housing market. Whereas young adults may have been blocked from moving up the housing chain, away from neighborhood that cater to young adult renters and eventually into their own place, more opportunity means more construction, and increased outflow from cities.
The buildup of millennials in cities, in other words, was a temporary pause from the normal cycle, according to Myers, and typical mobility patterns towards the suburbs will begin reasserting themselves.
Millennials Need a Decade to Save for a Down Payment, Says Study [Curbed]
Millennials Have Crisis in Confidence Over Homeownership [Curbed]