But today their fortunes are turning. Many millennials, especially the older ones, are flush with savings and are starting families. Those who already owned homes hit the equity jackpot with the pandemic’s historic run-up in house prices. The 70 million-plus millennials, born between 1981 and 1996, are the largest share of homebuyers today but are not yet the greatest share of homeowners, so they have ground to make up. And their lifestyle preferences are shifting as they buy homes and settle down, have kids, and grow in their careers.
This great reshuffling of millennials will reshape the American landscape, particularly when it comes to which regions thrive and which stagnate, over the next decade.
There are good reasons why millennials moved later from adulting to adulthood. For one thing, the unemployment rate for 20- to 24-year-olds after the 2008 financial crash didn’t return to normal-ish until 2016 — basically, for much of the early careers of millennials, which is so critical to establishing lifetime earning potential. Add on to that their now-$1.75 trillion in student debt and the fact that rents were rising faster than incomes during that same period and it’s clear that for many young people then the only way to buy a home was by the good graces of the Bank of Mom and Dad.
Marriage and kids also came later. While the typical baby boomer walked down the aisle in their early 20s, millennials have tended to marry in their late 20s or well into their 30s, if they lived in cities like New York or Washington, D.C. Some 55 percent of their baby boomer parents had kids between the ages of 23 and 38, compared to 42 percent of millennials (so far). Tighter finances played a role in this delay, but so did gaining education and losing faith in organized religion, twin trends that distinguish millennials from prior generations and that correlate with delays in family formation.
But it’s increasingly clear that millennials are doing everything their parents did, just later. Some 64 percent of millennials are forecast to be married by the time they’re 35, just behind Gen Xers at the same age. The share of millennials with children is also closer now to the last generation, even after a delayed start. The pandemic proved to be a boon to household formation for younger Americans. And, significantly, millennials are now the highest-earning generation in American history, though by some measures they have less wealth. In other words, it’s time to retire the notion of millennials living in their parents’ basement — some are old enough now to own the basement where their parents now live.
The Rise of the ‘Have-It-All Hubs’
Where millennials choose to settle down will define the future of America’s metros. And the future winners look much like the past winners: Sun Belt metros with good job markets and more-affordable housing. Places like Dallas and Austin in Texas, Raleigh and Charlotte in North Carolina, Denver and Boise in the Mountain West, Phoenix in Arizona, and Nashville in Tennessee. Florida is also drawing in waves of younger migrants — Jacksonville, Tampa and, of course, Miami are hot spots — though they’re still swamped by an even greater share of older movers. These are the “have-it-all hubs” — growing metros where you can have a good career, afford a home and raise your family.
College-educated millennials don’t just have to move to, say, San Francisco or Washington, D.C., to get a career boost akin to going to grad school. Today, thanks to a tight labor market and the widespread adoption of remote working tools, they have choices. Crucially, Americans without college degrees can also afford the same fast-growing metros as knowledge workers. Boomtown economies like Austin are becoming more diverse with thicker labor markets, while places like San Jose and Seattle risk becoming digital-era Detroits — stagnant company towns vulnerable to disruption. And, as Bloomberg’s Conor Sen recently pointed out, why not strap your career to the rocketship of a fast-growing metro like Nashville with decades of growth ahead?
Have-it-all hubs are not just adding more migrants, they’re swelling with new families. While the nation’s birth rates plummet to record lows, there’s a mini baby boom in America’s boomtowns, particularly in diverse or religiously faithful communities such as Houston or Salt Lake City. Long gone are the days where it was perfectly normal to raise a family in the coastal superstar cities; those places are mostly serving the young and single now. Today, there are more roommate households than nuclear families in Manhattan, more dogs than children in San Francisco. And is it any wonder families pack and leave the cities where closing classrooms and renaming schools are a norm, even as students suffer and fall behind?
One clear winner from the pandemic: suburbs. The share of new households moving to the ‘burbs in 2020 jumped by more than 40 percent from the year before. Even now, urban areas, especially the largest ones, are losing people, and that’s proving true as millennials age. Urban living is still popular among the under-30 crowd, and more than four in 10 millennials still live in high-cost city centers, but those locales’ share of older millennials has been falling since 2015. And while millennials are still more likely to live in multifamily housing than prior generations, as they move further into their 30s their demand for single-family homes is shooting upward, as it was for their parents at a somewhat younger age. The upshot is that it’s not just urban neighborhoods like Dallas’ Uptown or Deep Ellum that will continue to thrive, but fast-growing suburbs like Frisco and McKinney to their north.
Bringing Back the Boomer Bargain
There’s just one problem: There have never been so few homes for sale, ever. A few years ago, there were around a million homes on the market; today there are just 272,000. A third go under contract immediately, which had been unheard of. And they’re going for record sums: The median home price is up an astonishing 20 percent this past year alone. Hopeful buyers on the sidelines are also seeing enormous rent increases on new leases.
One key part of the house-shortage problem is that baby boomers are staying in their homes longer than previous generations, right at the moment when millennials are reaching peak home-buying age. Meanwhile, we’re not building enough homes to keep up with demand, which further drives up prices. Pandemic-era shortages in everything from cabinets to garage doors aren’t helping. Record-low interest rates are taking the sting out of high prices — a 30-year mortgage that was at 7 percent in 2001 dropped to 2.7 percent 20 years later — but also may be helping drive prices up as cash floods the housing market.
This means the booming have-it-all hubs will have to work overtime to stay that way. That includes providing more homes, more jobs and better schools where people want them. This isn’t a fanciful dream; it’s what boomers enjoyed when they were the same age as millennials. The average teacher in California around 1970 earned the equivalent of $74,000 in today’s dollars at a time when the average home there went for $177,000. America’s millennials deserve the boomer bargain too.
When it comes to housing, that means letting property owners get more of their property rights back, as California’s SB9 did by allowing owners the freedom to build more on their own lots. While exurbs and city centers have been adding housing recently, it’s older, close-in suburbs that have been more or less locked up for decades, even as millions more millennials begged to be let in. They should follow the lead of Nashville’s Wedgewood-Houston neighborhood, which during the pandemic greenlit anywhere from two to five or more homes on a single lot, along with new mixed-use main streets in walking distance.
The future of this country starts in the places where millennials can actually buy a home and start a family. If we are to make 2025 a far better year to be born than 1985 was, it starts by letting ‘er rip on every front: more housing, more jobs, more and better schools. A boomer bargain is but an abundance agenda by another name.
The alternative is clear in the superstar cities that for all their wealth can’t seem to do anything, build anything, or restore anything resembling the American Dream. Have-it-all hubs are a hedge against this decline and despair, and a bet on a brighter America. Let's do better for the next generation.
Governing's opinion columns reflect the views of their authors and not necessarily those of Governing's editors or management.
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