Montgomery County Executive Marc Elrich’s recent remark about millennials and housing doesn’t just speak volumes about politics and elected officials, but possibly reveals the future of housing and business in the county. His “slip of the tongue” opposing building housing for millennials was not taken lightly and received plenty of pushback.
To be fair, Elrich has clarified his statement and is making amends by meeting with millennial activists who reside in the county. Elrich should consider it a defining moment of his tenure and take the opportunity to address the county’s housing and economic issues head-on by embracing millennials and business.
Millennials shouldn’t be pigeonholed just because their generation is misunderstood. According to the National Association of Realtors, millennials are the largest segment of home buyers. They account for more than one-third of nationwide home buyers. Jessica Lautz, NAR’s managing director of survey research stated, “Their buying power is huge…They are definitely a force in the market. They are overtaking the baby boomers.”
Affordable housing is an issue for every generation, including millennials. According to the NAR, 86 percent of millennials “believe that buying a home is a good financial investment.” However, like all home buyers, millennials are facing low home sale inventory, increasing home prices,and rising rents. Additionally, many millennials have the heavy burden of student loan debt, which stifles their ability to rent, as well as save for a down payment to buy a home. To put this into perspective, consider Zack Friedman’s report for Forbes indicating student loan debt approaches $1.5 trillion. This makes student loan debt the “second highest consumer debt category” (mortgage debt is first).
Millennials don’t expect cities to tear down older affordable housing to build new homes for them. It’s quite the opposite. As was reported by NAR research, many millennials are moving out of the city and opting to live in more affordable suburban neighborhoods. Instead of tearing down homes and disrupting communities, millennials are revitalizing older homes and invigorating forgotten neighborhoods.
It has been established that millennials are currently driving the economy of housing, and they should not be dismissed. According to the National Association of Realtors 2018 Home Buyer and Seller Generational Trends study, millennials have been the most active generation buying homes for the past five years. Millennials represented more than one-third of all home purchases in 2018. It was pointed out that the number of millennials buying homes in urban areas is declining. After peaking at 21 percent in 2015, only 15 percent of millennials purchased in an urban area during 2018 (only two percent buying a condo).
The millennial shift toward the suburbs is affecting business too. Jim Fagan recently wrote about businesses chasing millennial talent (Millennials are re-migrating to the suburbs and their employers are following; westfaironlline.com; September 14, 2018). He observed that as millennials are moving out of urban areas, their employers are following them. Just as millennial migration is affecting residential real estate; it is also affecting commercial real estate and the urban landscape.
Demographics are not static and affect housing and the economy. Millennials are a driving force in today’s housing and labor markets. If Elrich is to address the county’s economy and housing issues, he should embrace millennials and the businesses that employ them.
Dan Krell is a Realtor® with RE/MAX Success in Potomac, MD. You can access more information at DanKrell.com