Millennials: The Re-Urbanization of America
It’s always a little funny how history repeats itself, and when it isn’t funny… it’s troubling. America is the best “catch 22” of a nation to live in right now. It’s a great place to live and work — if you’re highly skilled, highly educated, or someone who has inherited an older set of wealth. For the rest of us, it is becoming a nation many are reconsidering living in.
I recently listened to the Wharton School of Business radio show discussing the urbanization of global cities and millennials’ collective earning power to influence the upswing of an entire region’s economy. After hearing many of the speakers discuss the changing landscape of America and the micro-economies that we are creating across the nation I was compelled to dig a little deeper into the numbers.
By 2025 Los Angeles, CA and San Francisco, CA will be in the top 30 most crowded global cities in the world
In Los Angeles, the population growth isn’t what it used to be. During 2010–2013, Los Angeles was in the top 25 most booming cities in America with 2.4% growth. Oddly enough for Los Angeles, it is quickly running out out space to house more of America’s biggest migrators, millennials. During that same stretch of time millennials only made up 23% of the population, but it became 43% of America’s most migrative population. When a city begins to run out of horizontal space, it tends to start building towards the sky and tearing down “old” neighborhoods to make room for more people. In short, these are the formative stages of gentrification — I’ll touch on this later.
San Francisco saw a 4% increase in urban population growth during 2010–2013, but again it is a city that has no more space to build. Over the last 5 years, San Francisco has seen a 7% increase in rental prices due to this growth. Teachers have been priced out of the city. Again, these are the formative stages of gentrification — but I’ll touch on this later…
Millennials are currently the largest generation, and we’re a diverse class of people
For 2016, Bloomberg (via U.S. Census Bureau) estimates there are 88.5 million millennials in the US. Scholars have narrowed the gap of millennials to individuals born between 1982 and 2004. Millennials span all income brackets, collectively lean left for political preferences, drowning in debt with less money to spend, and migrating to new “urban” cities at a higher rate than ever before. Also, over 60% of millennials are choosing to rent over buying a home. Most are the obverse of their parents’ generations as their interests and priorities do not align with those of the generations before them.
Millennials have one of the largest collective buying powers and income ratios in America today. However, they are very reluctant to buy for permanence. We want to have things, but not own them. We are also responsible for single handedly kickstarting the sharing and on-demand economies. e.g. Uber, Lyft, Doordash, Postmates, Shyp, and Caviar.
I’ve been trying to find data to support this next statement, but here it it is: millennials are probably the largest group of displacers in America. Meaning, we are driving the formative stages of gentrification at an unusually high rate. Nevertheless, let us not forget about “The Great Recession” from 2007–2009 that was led by a 8 trillion dollar housing market collapse.
Following the collapse of the housing market, in San Francisco alone the median price of a home was around $690K compared to its nearly doubled value today of a whopping $1.25 million. Millennials are not in the financial position to sweep the current housing market with average listings going for $1.6 million — so what does this mean? Well…it means we will urbanize older neighborhoods, rent in up-and-coming ones, and co-own semi-expensive units until the market corrects itself. After pulling some numbers from DataUSA, it is easy to see how gentrification is happening in San Francisco. Everyone is being priced out of their own neighborhoods.
With the majority of homes being over half a million dollars, it is very unrealistic to purchase a home in this seller’s market. Buyer beware.
There are a certain set of characteristics a city must have in order to attract masses of millennials to move there.
Oddly enough, there is a “special sauce” to building a city or at least revitalizing it for the 21st century millennial workforce. We want (by the data): sports teams, 3–5 unique cultural neighborhoods/areas, good public transportation, high median pay, and solid urban housing. Let’s focus in on solid urban housing as it is the crux big cities are currently falling upon.
U.S. Housing and Urban Development (HUD) is a government agency created in 1965 to support community development and increase home ownership. HUD does this by improving affordable home-ownership opportunities, increasing safe and affordable rental options, reducing chronic homelessness, fighting housing discrimination by ensuring equal opportunity in both the rental and purchase markets, and supporting vulnerable populations. -Investopedia
Over the last 50 years the stronghold HUD has in communities is starting to dwindle, rapidly. At the height of HUD in America there was a lot of government assistance programs that aided in the development of the communities where HUD was most prevalent. Today, many of these programs are either nonexistent or their budgets are too small to keep up with the demand. When you financially weaken the core of a government assisted program private funds begin to pour in and overtake communities — and this is exactly what is happening in many of America’s fastest growing cities.
The Tenderloin, home to San Francisco’s largest homeless and displaced peoples community is now the new up-and-coming neighborhood for millennials to move in to, due to it’s cheaper price. I’ve met quite a few people who work downtown and claim to live in the “Tender” or “TenderNob” because it’s “cheaper to live here than anywhere else in the city.” A neighborhood that was built on the premise of being a refuge for displaced individuals with astounding amounts of funds stemming from the HUD program is now the up-and-coming neighborhood for millennials that is being urbanized by the way of gentrification or as urban planning professor Markus Moos claims it to be “youthification.”
Millennials are renting their way into neighborhoods that were originally built as safe havens for vulnerable populations and turning them into young adult playgrounds. As odd as it may sound, millennials of all demographics are looking to reface the ghettos of America that once were. The same neighborhoods that were once considered unsafe and unruly are now being thought of as the next best places to live.
How will this all change or end? At the moment, I’m not set on any one outcome, but I can say that it won’t end well. At least, for the foreseeable future this will continue to be the trend until something collapses: the housing markets in these urban cities, the subprime student loans most of us have, or the tech bubble that many claim is among us.
Realizing I’m a millennial who doesn’t know how to fix all of this or where to start helping out. Looking to meet with people to discuss this and I’m interested in reading your responses to this piece.
Find me at: https://twitter.com/chobberoni
Thanks for reading.
