When millennials began entering the rental pool en masse, the multifamily industry couldn’t have been happier.
After all, the recession—brought on by the single-family mortgage meltdown—had pulled down the for-rent side of the industry as well, and the idea of a burgeoning “renter nation” was more than welcome news.
The stars had aligned. After a few years of underbuilding, a voluminous new demographic dramatically emerged from the shadows and formed a line at the door of your friendly local leasing office.
As more millennials aged into the rental pool, we heard time and again that they all wanted to live in cities—and developers responded by targeting urban cores. That urban legend continues to play out, but not in the way many had expected. Some of the biggest cities first out of the recession—Washington, D.C.; Houston; New York—are now offering concessions.
There’s a fine line between rational excitement and irrational exuberance, and we may have crossed those city limits, our desire driven by demographic demand slight-of-hand.
Consider the North American urban baby boomer. For a few years now, we’ve heard that the nation’s second-largest generation is preparing to downsize all the way from a white picket fence to a luxury box in the sky. And the new-construction pipeline in many urban areas—so heavily concentrated in Class A luxury—reflects this leap of faith.
Our brethren in the single-family world are in a similar situation, as the costs of land, labor, and materials—especially labor—likewise force many home builders to aim at a wealthier clientele.
But here’s the question that should concern any developer or financier banking on this trend: Where is the evidence of this long-term mass boomer urban migration?
Census figures paint a much more nuanced picture than headlines will allow. The 2014 American Community Survey data show exurbs and suburbs to be growing at a faster pace, while domestic net migration trends show a shrinking “urban core” across all demographics.
What’s more, those cities with the fastest-growing seniors populations per capita are almost entirely in the Sun Belt—Atlanta, Raleigh, Vegas, Jacksonville, Sacramento, Tucson … not exactly the picture of Metropolis, given that Sun Belt cities tend to be “suburbanized,” much more sprawling than Northeastern cities, according to economist Jed Kelko.
In fact, since 2010, the senior population in core cities has risen by a paltry 621,000 compared with the suburbs, where the senior population has spiked by 2.6 million, according to demographer Joel Kotkin in an analysis of Census data.
Just 13% of buyers age 50 to 59 bought homes in urban areas and central cities in 2015, according to the National Association of Realtors (NAR) Home Buyer and Seller Generational Trends 2016 report.
What about the other 87%? And what about older boomers?
Regardless, this myth about boomers loving city life persists and is almost as insidious as the myth of millennials preferring city life, which NAR’s 2016 report notes is decreasing:
The share of millennials buying in an urban or central city area decreased to 17 percent (21 percent a year ago) in this year’s survey, and fewer of them (10 percent) purchased a multifamily home compared to a year ago (15 percent). Overall, the majority of buyers in all generations continue to purchase a single-family home in a suburban area …
So, even millennials—those city lovers of yesterday—are going suburban, and we now see headlines like “How Millennials are Changing the Suburbs” and "Young Americans: Yearning for the Suburbs, Stuck in the City."
To be fair, in 2014, just 11% of boomers age 50 to 59 bought in urban areas, so the 2% bump year over year may indeed be evidence of a significant trend. But one year does not a trend make—and an idea doesn’t become a fact just because it’s repeated and repeated by those with vested interests.
Is there even anecdotal evidence of this mass psychological and geographic migration? Who are these boomers who are just itching for city life?
I’m sure they exist; I just don’t know any. When I asked my own parents if they’d ever move back to Brooklyn from whence they came, they looked at me like I was crazy. Their memories weren’t quite so fond.
“We couldn’t wait to leave, to have our own space, to stretch out and have some peace and quiet,” they said. “Why the heck would we ever want to go back?”