Who would have thought that the suburbs would ever be "lit", as the kids say.
Alright, do I have your attention with my cool lingo? Ok great!
Remember that pesky generation that wanted the option to work more from home before it was made necessary by a pandemic? Yes, THOSE kids, THE MILLIENIALS are leading the charge for moving out of major metropolitan cities and into the cozy confines of the suburbs or smaller cities. The COVID-19 pandemic has changed the way people are thinking of real estate and many people no longer want to have small downtown apartments or condominiums during a time when we are all spending more hours with our friendly confines and are sick of the high cost to live in them. Many millennials have begun finding their socially distanced space in the suburbs of these major cities or in different, smaller cities altogether, at a much lower cost.
PricewaterhouseCoopers Emerging Trends in Real Estate 2021 report shows that those people ages 30-49, who are getting married, having kids, and are in expansion mode will likely grow by 8.4 million in this decade.1 And this demographic, as well as many others, are seeing the world change before their eyes.
Many of us have worked from home for the better part of the last year. Some companies have already hinted at permanent work-from-home policies. People are looking for homes that have bigger home offices or larger areas for their kids to learn from home. Parents want more green space for their kids to get out that energy! With the typically higher property taxes and cost of living in homes in major cities, smaller towns become more attractive.
It's not just millennials, though. Parents with college-aged students are having their kids graduate and come back to live at home at record rates. Some are in the Sandwich Generation and are financially supporting their kids and their parents, sometimes in their home. A need for a bigger space at less of a cost is becoming more and more of a priority.
Small towns and suburbs are redeveloping their downtown
areas to attract a younger demographic to live in their towns. An example of
this can be seen where our oXYGen Financial home office resides in Alpharetta,
GA. When the pandemic comes to an end, large swaths of people will be perusing
these downtowns that are being set up as a Live, Work, Play environment.
Some political changes may aid in the growth of this trend as well. With the new administration signaling that they may forgive parts of student loan debts, expect homeownership to rise among Gen Z and millennials. This number already went up 19% over 2020 and with low rates abound, I expect this number to keep growing.
This trend actually isn't new. It has been slowly occurring since 2017 but COVID-19, as it did with many things, accelerated the trend. Housing inventory in San Francisco has risen 96% year-over-year and sales inventory across New York City reached their highest levels in August of 2020 since 2010.2
It remains to be seen what the future holds when it comes to urban real estate. Surveys show that Gen-Z will likely follow previous trends that favor urban metros but Gen Z is smaller than previous generations and a changing landscape of work environments and suburban downtowns may see the trends of The Great Escape continue to escalate.
1 PwC and the Urban Land Institute: Emerging Trends in
Real Estate® 2021. Washington, D.C.: PwC and the Urban Land Institute, 2020.
2 Stephanie Yang, "Young Families Are Driving the Exodus From New York City to the Suburbs," Wall Street Journal, October 15, 2020, accessed via Factiva, November 19, 2020