Analysts are anticipating a resurgence of interest in suburban housing from Millennials looking to buy cheaper homes with more space. Alexandra Scaggs reports in the Financial Times:
US urban living is still losing its shine, three full years after Covid-19 shut down city centres. But apartment rents haven’t declined — yet.
While the prospect of continued city flight has sent office-property valuations into a freefall, US rents are still up, with an 8.8-per-cent rise from last year, according to the Census Bureau’s inflation data. (The median Manhattan rent rose to a new record in March, via Elliman.)
Now some Wall Street analysts expect more Americans to abandon city-apartment rentals for greener pastures, and either buy or rent elsewhere. Analysts’ logic is backed by a simple argument: as Millennials start families, they should keep following the well-trodden path out of city centres into the suburbs and exurbs, in search of cheaper and more spacious living, along with more accessible childcare.
JPMorgan’s strategy team led by Joyce Chang argued in an April 28 note that those trends will drive younger Americans to buy homes:
We expect an increase in demand from first-time homebuyers as Millennials begin forming households in greater numbers. According to the National Association of Realtors, the median age for first-time homebuyers is 33 years old, and according to the CDC, from 2021-2026, the number of people turning 30 years old will average 4.0bn, 18% higher than the 3.4mn people who turned 30 years old from 1998-2005. US Census Bureau data confirms a rise in home ownership among those aged 18-34, while the percentage of those aged 18-34 living with parents is levelling off. We expect the influx of first-time homebuyers from Millennial household formation to provide a major tailwind to housing demand.
Read more here.