Why millennials are driving the population growth of urban cores
Whether it's the lack of available housing, job opportunities or various amenities, millennials are driving the population growth of urban communities.
Across the 50 largest metropolitan statistical areas, millennials account for 29% of all heads of households in urban areas, compared to 18% in the suburbs and 16% in rural areas, according to the Urban Land Institute.
A major reason for that chasm is the inventory growth of rental apartments in urban areas doubled that of suburbs (32% to 16%) from 2010 to 2017. Combined with the fallout from the Great Recession, this presented the new wave of professionals more options for where to live.
A change in the workforce is responsible as well. In 2015, urban areas occupied 30% of existing jobs and the suburbs had 64%. However, urban job growth outpaced suburban at a 20% rate compared to 15% between 2005 and 2015.
The study's findings are instructive to mortgage companies because they reveal observations about first-time homebuyers, a key borrower segment for lenders.
Shifts in lifestyle preferences also play a role. Millennials are attracted to the mixed-use areas found in cities that provide an amalgam of commerce, culture, function, residence and access to alternative transportation. About half of urbanites commute by transit, walking, biking or carpooling, compared to 22% in the suburbs.
"Our cities are evolving into places that are more diverse and more interesting than ever, with a mix of neighborhoods defined by distinct characteristics that are drawing different residents and workers for different reasons. There are very few urban areas in which housing is not mixed in or very close to commercial uses," J. Ronald Terwilliger, founder of chairman of ULI's Terwilliger Center, said in a statement.
Between 2010 and 2015, the 3.4% population growth of urban areas nearly matched the 3.7% rate of the suburbs for the first time in decades. The disparity is usually vast. If the numbers from the prior decade are included, those growth rates go to 1% for urban and 13% for suburban.
Likewise, recent Census Bureau data suggests the post-recession spike in large metro population clustering is now subsiding, a sign that home prices, jobs and evolving consumer behaviors are restoring prerecession migration patterns.