Introducing the Millennial Metric

The Millennial generation may be the most consequential for North American cities since the Baby Boomers 75 years ago. They are certainly the most misunderstood. For more than a decade, their lifestyle preferences have been perceived as contrarian compared to their parents, whether that meant living at home, forgoing a driver’s license, or choosing to live in city apartments rather than suburban homes.

But even millennials get old. Their eldest members turn 40 years old next year, while more than half of the 75 million-strong cohort has already entered their 30s. In practice, this means they are increasingly pairing off and starting families if they choose. With these decisions comes a change in priorities — think daycare, not dive bars — which in turn will have ramifications in the urban realm on a par with their predecessors. Just as the Greatest Generation constructed suburbia and working boomer mothers populated “edge cities,” how and where will millennials choose to live?

This was a complicated question even before the COVID-19 pandemic swept across the world in the spring of 2020, locking down much of the United States and Canada for several months and instigating an unprecedented economic contraction. While young people have proven resilient to the disease, and an eventual vaccine is all but certain, the economic and cultural reverberations will be felt for years.

To answer these questions, we created a “Millennial Metric” analyzing which factors prove most decisive in their choosing where to live and why. First, we explored which major metros millennials are most likely to choose in the 2020s (excluding additional pandemics). In assembling and weighting the variables, we chose four categories with particular valence:

• Affordability, as measured in the number of years required to purchase median-priced home at a median household income. If a home in Los Angeles requires 43 years, one in Dallas requires only 14, and in Columbus just 12.
• Employment, particularly employment growth as a measure of continued economic vitality, along with the number of startups, implying strong conditions for future employers. A hallmark of America’s decade of uneven growth was the staggering inequality in where the highest-paying jobs are — just five metros and 16 (mostly urban) counties produced 90% of America’s tech job growth between 2005 and 2017.
• Accessibility, captured by a combination of Redfin’s Walk Score, Bike Score, and Transit Score. These tabulations, which measures proximity to local amenities such as retail, restaurants, parks, and schools, have become a popular proxy for urbanity and correlates closely with rising property values for office and multifamily homes.
• Lifestyle, a measure of cultural offerings, parks, and public safety. One variable that’s absent is the quality of schools, which strongly correlates to public safety.

The results are striking in several respects. First, given millennials’ debt, their statistically significant-but-diminished desire to start families, and rising costs of living spurs them to place particular emphasis on employment — now, more than ever. Second, affordability is important, but highly affordable cities lacking strong job growth such as Pittsburgh or Detroit tumbled down the rankings. Third, accessibility and lifestyle factors trail far behind, at least at the metro level.

The latter refutes the contention made by the urbanist Richard Florida nearly 20 years ago in Rise of the Creative Classthat young college graduates are more likely to choose metros on the basis of lifestyle amenities than employment. It may have once been true, but no longer after several severe recessions.

The outperformers? Orlando, which ranked 1-2 in employment growth and startup formation, finishes first overall. Although not a technology hub by any means, its low cost of living and status as a popular back office destination validates the choice. Close behind are Austin, Nashville, Salt Lake City, and Dallas-Fort Worth. Of the four, only Salt Lake City is a notable outlier from U.S. Census figures on millennial migration – another beneficiary of corporate relocation, its strong job growth more than offsets lackluster affordability and housing amenities.

Next, we narrowed our focus to just five cities we identified as representative: Nashville; Dallas-Fort Worth; Denver; Columbus, Ohio, and Washington D.C. This time, rather than create a model based on millennial preferences and using it to predict future destinations, we elected to identify the 25 ZIP codes in each selected metro with the highest and lowest number of millennials present, then tested potentially relevant variables. Besides adding age ranges (25-34 in 2017) and families with children, they included several new factors: median rent (and unaffordability); commute time to work (as a proxy for distance from the central business district); housing density and the presence of units with two or more bedrooms; and school quality (as graded by Niche.com’s combination of U.S. Department of Education data and assorted surveys).

Unsurprisingly, the neighborhoods most popular with younger, childless millennials include such hip districts as Denver’s River North Arts District (RiNo) and Dallas’ Uptown — both of which fit the mold of rental apartments with high accessibility scores and amenities such as the latter’s Klyde Warren Park. But the situation flips once families and home purchases enter the equation.

Millennials certainly resemble previous generations when it comes to the correlation of marriage, children, and homeownership. In each of the metros studied, the majorities of unmarried renters and married homeowners mirrored each other. This life transition over time (along with the countervailing trend to not marry at all) has drastic consequences for choosing where to live. While renters opt for urban neighborhoods with high amenities, homeowners (especially those with families) overwhelmingly choose affordable ones – although not exclusively!

The picture that emerges is a generation determined to have it all — or at least trying to “satisfice” within their many constraints. The model suggests that rather than pulling up stakes and decamping for the suburban fringe as their parents once did, they are choosing mixed-density “collar neighborhoods” named for the areas ringing downtowns, and older suburbs closer to the core in terms of both distance and character than the exurbs. What remains to be seen is how the pandemic — and resulting depression — disrupts this trend.

What the Millennial Metric predicts, then, is that the most indebted generation in history will choose to migrate from high-cost (and highly-taxed) coastal and Rust Belt metros to prosperous ones in the South, West, and Southwest. There, they will choose to live as close to urban areas as possible, until (or unless) they choose to own a home and/or marry and start a family, in which case they will struggle to maximize available amenities within the constraints of affordability. And they are likely to do all of this within the next decade.

Which means the real debate isn’t whether millennials will prove to be an urban or suburban generation, but why their actual preference — affordable, walkable, amenity-rich neighborhoods with a relatively short commute — still hasn’t been built. Without them, cities risk squandering a once-in-a-generation opportunity.

Read the report

Featured photo by Ina Carolino on Unsplash.