Millennials want to rent in the nation’s largest cities because they offer culture and excitement, right? WRONG! Despite this common belief, recent studies show that as millennials are getting older and starting to have families, they are interested in buying homes in the suburbs.
The National Association of Realtors 2017 Home Buyer and Seller Generational Trends study revealed that the need for more space at an affordable price is causing millennial buyers with children to move outside of the city. Only 15 percent of millennial buyers bought in an urban area, which is down from 17 percent last year and 21 percent two years ago.
The main reason millennials are looking to purchase homes in the suburbs is cost savings. According to a recent survey from Zillow and Care.com, basic living expenses can cost families an average of $9,073 more per year to live in an urban neighborhood rather than the suburbs. New York City has one of the highest variances between urban and suburban living, with city residents paying as much as $71,237 more a year than those in nearby suburbs.
Here are four reasons why the suburbs may be a better deal for millennial buyers:
1. Property taxes and home prices are more affordable.
Nationally, families living in a city spend an average of $22,271 a year on property taxes and mortgage payments. In the suburbs however, families spend an average of $15,006. That’s an annual savings of $7,265, and $217,950 over the course of a 30-year mortgage! This long-term value is important to millennials who are very cautious with how they spend their money.
2. You can get more for your money.
There’s no question that space is easier to come by in the suburbs. Millennials can purchase a three-bedroom, two-bathroom house in suburbs for less than a one-bedroom condo in the city. As this generation begins to have children, extra space is a major factor when they’re deciding where to live. Suburban homes offer yard space where kids can play and the family dog can roam. Urban environments provide very limited courtyard space for these activities or families have to walk to city parks.
3. Child care is less expensive.
Child care is the single most expensive line item for families, according to data from the Economic Policy Institute. With so much of millennials’ income going toward this necessity, they will be tempted by the potential to save on child care in the suburbs. The average cost of having two children in the same child care center is $21,381 in a city versus $19,573 in the suburbs.
4. Suburban communities offer city amenities.
Millennials are looking for towns that offer urban amenities such as restaurants, grocery stores, fitness centers and entertainment. There are many suburban communities that meet this criteria within commuting distance to a city. For those millennials that place a high priority on walkability, they can work with a real estate agent to find a home in a walkable neighborhood with a downtown area.
5. There’s a good potential for resale value.
The average homeowner keeps their home for ten years, while the average Millennial only keeps a home for six years. A starter home in the suburbs is a stepping stone to the home of their dreams so resale value is an important factor when choosing where to live. In New Jersey, home value appreciation has been robust in economically strong commuter suburbs closest to the city such as Jersey City, Hoboken, Glen Ridge and Ridgewood.
As a first-time homebuyer, you’re sure to have questions. Our mortgage experts can walk you through the mortgage application process, explain all available mortgage options and help you make the best choice. Contact one of our mortgage representatives to request a consultation.