Straight out of college, ready and willing to take on the world, and finally with a job in the field one wants—is this heaven, or is this just Washington, D.C.?
The nation's capital has risen over the last few years as the number one most popular setting for Millennials, a destination that can help the younger generation launch themselves into the kind of lives they want to live, but there's a trade-off to living in Washington, D.C. that's only recently been discovered. As the fifth most expensive city in the nation, Washington, D.C. causes first-time homebuyers to have to put their lives on hold. That means waiting longer to save enough money for one's first home, for marriage, and even for childbearing.
In the early 1970s, first-time homebuyers rented an average of 2.6 years before buying their first home, but today's first-time homebuyers rent an average of six years before their first home. It's not that Millennials aren't interested in buying their first home. According to the MRIS End of Year Real Estate Survey in 2014, 87 percent of millennials have a positive view of homeownership with eight out of 10 owning or planning to own a home one day.
Despite the high number of Millennials who plan on purchasing a home in the future, only 25 percent expect to do so in the next two years with the majority (53 percent) expecting or planning to buy their first home after 2018, according to a study published in July 2015 by Apartment List.
Millennials are roughly half as likely to own a home in Washington, D.C. than in any other part of the nation. The issue, of course, comes down to money—or the lack thereof. Allison Goodhart, director of sales and real estate agent with the Goodhart Group at McEnearney Associates, told Curbed DC that while Millennials are able to afford their monthly payments, it's the down payment that really causes a struggle. In order to purchase their first home, many are turning to their parents for financial help.
There is also a new trend that, according to Goodhart, is very atypical of first-time homebuyers: more couples are purchasing homes before they're engaged. One in four couples between the ages of 18 and 34 bought a house together before they were married as opposed to roughly one in 10 couple over the age of 45, according to a study by Coldwell Banker Real Estate.
Despite the trade-offs, Goodhart said, "Being in the city is great for Millennials because it has the lifestyle that they're looking for. We're seeing time and time again that Millennials are really looking to sacrifice space and really be in the mix and be able to walk to everything." She described Washington, D.C. as having the convenience of major cities (e.g., walkability, shopping, nightlife) as well as parks and community-centered activities.
"You've got the urban life, but you're not totally penned into that concrete jungle," she said.
Even so, the trade-offs have become more and more burdensome for Millennials. In order to afford their first home, many are simply leaving. According to The Washington Post, 44 percent of the 59,000 people who left the District in 2012 were between the ages of 20 and 34 years of age. Census data also indicated that between 2013 and 2014, there were only 2,662 between the ages of 25 and 34 who migrated to Washington, D.C. when between 2010 and 2011 there were 10,430 people who arrived in that age bracket.
Some of the hypotheses as to why the younger generation isn't flocking to the city the way they did a few years ago include: cuts to federal jobs and spending, fewer jobs that are suitable for Millennials just out of college (i.e., entry-level), and the growth of non-Millennials renting micro-units. But it's more than just jobs that are keeping Millennials away; its their hopes to become parents and homeowners.
When Millennials began migrating to Washington, D.C., developers adapted to their needs by designing apartment buildings with micro-units and limited parking options. In June 2015, the D.C. Board of Zoning Adjustment began to push back against zero-parking developments, arguing that there isn't enough parking already.
Meanwhile, developers argued that the younger generation either tends to opt for public transit or can't afford a car anyway, so they saw no point building more parking when they can construct more housing and get more money in the bank.
David Howell, housing expert and Executive Vice President and CIO at McEnearney Associates, told Curbed DC that Millennials don't want to be burdened by cars. They would prefer to use the Metro or live in walking distance to their work.
Despite developers' efforts to adapt to Millennials' needs, they lost sight of the big picture. Now that some Millennials are nearing their early 30s, their lifestyles are changing, and they're focusing less on small spaces and nearby public transit. Millennials in their early 30s are searching more for safe neighborhoods as well as highly ranked schools in order to start families.
Andrew Tam, the vice president of Data Science at Apartment List, told Curbed DC that whether or not a Millennial has children really plays a part in how satisfied they are with Washington, D.C.
He said, "People who don't have kids really love D.C., and people who have kids really hate D.C." This may be due to how the only way to send a child to the best schools in the city is to buy a home in a pricey neighborhood. The D.C. Office of Revenue Analysis released findings in July 2015 that read:
"We found that a typical three-bedroom home in the attendance zone of a DCPS elementary school with the very top test scores - places where 80 percent or more students are proficient or advanced in reading - will cost over $800,000, and that is just the median price and does not incorporate post-purchase improvements to homes. Going down one tier does not help much either: in DCPS elementary school zones where 60 to 80 percent of students are proficient or advanced in reading, the median sale price of a three-bedroom home ranges from the high $600,000's to over $1 million. Not until you look at schools where 45 to 60 percent of students are proficient or advanced in reading will you find a wide range of median home prices, including several below $650,000."
Even Goodhart was uncertain as to where Millennials will shift as they grow their families. She said, "With the one child, [the older Millennials are] happy to be in a one-floor walk-up with a stroller, but I'll be curious to see how things change when there's that second child coming into the mix."
Now that Millennials are making the move away from Washington, D.C., they're not heading towards the suburbs, but to smaller cities like Milwaukee and San Antonio. According to Gizmodo, these cities are not only attractive to the younger generation because of their lower housing costs, but because of the aspect of revitalizing a smaller city.
Simply put, Washington, D.C. is not and maybe will never be a small city. What this means, as bluntly stated by The Washington Post, is that the Millennial boom is over. So, where does that leave the District? What needs to happen for developers to keep Millennials in the District is to construct housing that will appeal to the values of those who are trying to build a family: good schools, low-cost housing, and more space.
Whether or not that shift will begin soon or even keep up with the numbers of those Millennials leaving still remains to be seen.
· The cost of a guaranteed spot in a DCPS elementary school [District, Measured]
· The millennial boom is over in D.C. Is that terrible news for the economy? [The Washington Post]
· Marriage and Homebuying Study April 2013 [Coldwell Banker Real Estate LLC]
· Millennials Will Live In Cities Unlike Anything We've Ever Seen Before [Gizmodo]
· The 15 Most Popular Cities for Millennials (D.C. Is #1) [The Atlantic]
· Study: Most Millennials plan to purchase homes, but only after 2018 [Apartment List]
· The Arlington Exodus: Plans to Convince Younger Gen. to Stay [Curbed DC]
· Mapping the Cheapest and Most Expensive Places to Rent in Washington, D.C. Right Now[Curbed DC]
· Today's First-Time Homebuyers Rent Longer, Marry Later [Curbed DC]