Millennials to Blame for Housing Shortage?
Laura Kusisto | May 24, 2017
First, an Australian millionaire tells millennials they might be better able to afford a house if they just spent less money on luxury items such as avocado toast. Now millennials are getting flack for driving up housing prices. A report released this week by BuildZoom, a website for construction contractors, finds that fewer homes for sale meet the preferences of millennials. The report found young adults have been increasingly flocking to U.S. cities, which has prompted builders to focus on construction there. That has also made housing pricier, since the suburbs tend to have more modestly priced homes. New-home sales within five miles of urban centers in 10 of the nation’s most expensive and densely populated metro areas have surpassed levels from the year 2000. However, new-home sales remain more than 50 percent below where they were in 2000 in areas more than 10 miles out from the urban centers, according to the report. Young people’s desire to live closer to transit, restaurants, and their workplaces has caused a renewed focus on urban areas. For instance, the share of young, educated adults living in Washington, D.C., rose 8.6 percentage points between 2000 and 2014. Portland, Ore., and Chicago both saw increases of 6.4 percentage points, according to Jed Kolko, chief economist at the Terner Center for Housing Innovation at the University of California in Berkeley. "The expensive cities tend to be shifting toward a paradigm that says having a better location is better than having a fresher, greener, newer place," says Issi Romem, chief economist at BuildZoom. But the focus on construction in urban areas has meant less new housing in the suburbs. Further, higher land costs in urban areas have prompted developers to focus on higher-end housing, which has made it difficult for less affluent adults who want to branch out on their own. Romem says that where land is less expensive and where there are fewer land-use restrictions, starter homes are showing signs of gradually making a comeback. That will help provide millennials with more housing options, but they’ll have to be willing to leave city life behind.
Source: Realtor.com via The Wall Street Journal