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Are the suburbs a better deal for millennials?

03/16/2017

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Much has been made of the millennial desire to live in cities; however, a couple of recent studies show that for families with kids, the suburbs might be the place to be.

The National Association of Realtors 2017 Home Buyer and Seller Generational Trends study found that more millennials are moving to the suburbs with their kids.

As millennials age, more of them have children. This year’s survey found that 49 percent of millennial buyers had at least one child.

Affordability is sending millennials to the suburbs. The survey showed that just 15 percent of millennial buyers bought in an urban area, down from 17 percent last year and 21 percent two years ago.

More than housing

It’s not just housing affordability that is a factor in where millennials chose to settle. The Zillow and Care.com Cost of Living Report measured how much families could expect to spend on housing and child care in urban and suburban locations around the country and found that overall families spend $9,000 more a year to live in the city versus the suburbs.

The report looked at three common expenses: property taxes, mortgage payments and child care costs (for two children in the same center) and calculated how much they cost around the country.

Although the difference between city versus suburbs varies from city to city, it is most stark in New York, Chicago and Dallas.

In New York, a family would pay an additional $71,237 a year in order to live in the city.

Suburban living doesn’t always win out. In Philadelphia, a family would spend an additional $13,859 to live in the city as compared to the suburbs.

In most cities, high property taxes and rising home prices are usually the reasons why city living is more expensive; however, in some cities, the cost of child care is the issue.

Care.com and Zillow found that for the cities of Providence, Las Vegas and Philadelphia, child care centers are actually more expensive in the suburbs than they are in the urban core.

The report highlights the fact that when a family is deciding where to purchase, the cost of the home is far from the only factor to consider.

“More than a third of families exceed their initial budget when buying a home, according to the Zillow Group Consumer Trends Report, so before embarking on a move, consider the cost of living beyond just the home’s sticker price,” said Svenja Gudell, Zillow chief economist.

Change follows millennials

Zillow’s 2016 Report on Consumer Housing Trends also found that millennials, the largest group of homebuyers, are making their way into the suburbs.

The Zillow data says that almost 50 percent of millennial homeowners live in the suburbs, while 33 percent live in an urban neighborhood and just 20 percent live in a rural area.

Of the millennial buyers who moved in the past year, 64 percent stayed in the same city and just 7 percent of them moved to a different state. Millennials pay a median price of $217,000 for a home that is about 1,800 square feet, similar in size to what older generations buy.

Like older generations, they prize shared community amenities and are considering townhouses at higher rates than other generations.

Because of the size of the generation, millennials, like baby boomers, create change with each new life stage they move into. Now that they are buying, and moving into suburbs, they are changing the way we consider what a suburb looks like.

Business Insider is running a feature series called the “Death of Suburbia,” chronicling changing attitudes about malls, traditional developments and corporate office parks.

A more accurate term however, might be the transformation of suburbs. As millennials head to the suburbs with their families, their expectations are different than those of previous generations.

Millennials have a preference for local businesses and walkable spaces. It’s too early to predict exactly how they will change how we live, work and play, but it is clear that suburbs will adapt to the needs of this generation.

Deidre Woollard is the co-founder of Lion & Orb, a real estate public relations company. Follow her on Twitter @Deidre.

Email Deidre Woollard

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