Millennials are urban dwelling creatures who seek exciting jobs, a vibrant social life and seamless public transit. But after years of turning up their noses at the suburbs of their youth, they are increasingly finding the cities they have flooded to be too expensive.
In the top 10 most expensive metropolitan areas in the country, millennials are the number one age group getting priced out of the places they love. The first wave of millennials helped power progress in struggling areas, and now many can no longer afford to live there.
Millennials, born between 1980 and 2000, are increasingly unable to afford all the perks that initially drew them to the country’s largest cities, according to an analysis by Trulia.
When people get priced out of their current neighborhood, they move out to the next ring of up-and-coming areas, says Dowell Myers, a professor and specialist in urban growth and societal change at the University of Southern California.
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“When people are looking for cheaper housing what they do is move to another neighborhood in the same city. They don’t say, ‘you know what, I need someplace cheaper. I might move to Alabama.’ Nobody says that. You just don’t do that. You wouldn’t move to Alabama unless you had friends that already lived there,” Myers said. “The basic rule is people move short distances. They don’t make radical changes.”
Depending upon the area of the country, that new neighborhood may have to be in a cheaper city nearby. All of the most expensive urban areas have become more so in the past five years, with six of the 10 of those areas being in California.
“If it’s too expensive in San Francisco, you move to Oakland. If it’s too expensive in Oakland, then you move a little further south down to San Leandro or something,” Myers said. “You don’t necessarily pull up stakes and say ‘screw this place. I’m going to go to Oregon.’”
Indeed, San Francisco, Oakland and San Jose are all on the list of most expensive urban areas.
It’s much easier for millennials to pick a neighborhood based on proximity to the hottest new tapas bar, public transportation lines and their friends, due in part to their tendency to delay marriage and children. While getting priced out of the best areas isn’t ideal, millennials do have the flexibility to move to cheaper areas because they aren’t tied down by a spouse’s job or a child’s school district.
“Millennials compared to Gen Xers or Baby Boomers are very different in terms of how often they move, because this cohort generally tends to not have as stable a career as the older cohorts do,” said Mark Uh, data scientist at Trulia. “And they’re generally not settled down. You see much less of a range of them having a family and children, and that I think tends to ground some of the older cohorts and make them less mobile.”
Those unstable careers are due in part to coming of age during the financial crisis, unable to find jobs in their field or move beyond entry level positions. Older generations impacted by the downturn also became less likely to get new jobs, giving millennials fewer opportunities to move into open positions and advance their careers. These two factors contribute to the higher rate at which millennials are priced out of big cities – because they’re poorer.
“They’re starting out. They’re going to have much better incomes when they get to be 45 years old. I’m not saying that all the poor are millennials, but then millennials contribute to the number of poor people,” Myers says.
But even those who can still afford to live in neighborhoods they originally invaded for their coolness factor may chose to leave. In a study on “peak millennials” – when the proportion of young adults living in cities will level off and start declining – Myers found that as urban areas fill with young, white people, the homogenization can make the area less attractive to future waves because the ethnic diversity that originally made a neighborhood interesting has disappeared.
“Once an area becomes filled with white hipsters, the downtown location may lose competitive advantage with other white areas located in outlying districts or urban villages in the inner suburbs,” Myers wrote in the study.