Americans are surprisingly practical when it comes to their dream homes. Being married and having children is one of the biggest drivers of homeownership, but age will likely determine the type of homes that people want.
For many Americans, homeownership is part of their personal American Dream. For some, this dream of owning a home is well within reach, but for others it may as well be a dream within a dream. But what does this dream home look like? And where is located? What amenities do people dream of most? To find out, an online survey conducted by Harris Poll on behalf of Trulia surveyed 2,026 Americans in late May 2015 to tell us about their homeownership aspirations and the home they hope to buy one day. Here’s what we found.
First Comes Marriage, Then Comes Baby and House
With the U.S. housing market on the mend, 7 in 10 Americans (71%) said owning a home is part of achieving their personal “American Dream.” While still a majority, this is a notable decrease from 77% in 2010. Yet despite this downward trend, America is not becoming a nation of renters. Most Millennial renters aged 18-34 (89%) plan to buy a home one day – more than any other generation.
But as more people today forgo or delay marriage and children, homeownership has become more of a lifestyle choice than an expected life milestone. Among parents with children under 18 years old, 81% said homeownership is part of their American Dream. In fact, most parents – regardless of their marital status – plan to buy a home as their primary residence once day.
More than 7 in 10 Millennials Plan to Buy in 2018 or Later
While many Americans aspire to become homeowners, most are not ready to buy a home. Only 14% of those who plan to buy say they will do so within the next year. Most (69%) plan to wait at least two years.
In tracking the housing recovery, the intentions of Millennials has been a key indicator that we’ve been following. Why? This generation of first-time homebuyers was hit hard during the recession, and their ability to find jobs, move out of their parents’ homes and form their own households, and eventually become homeowners is a key part of a healthy housing market. Of the 18-34 years old who aspire to become homeowners, 72% said they plan to buy a home in 2018 or later. The sense of urgency only increased when marriage and children were involved.
|When Do You Plan to Buy (Another) Home as Your Primary Residence?|
|All||Married without Kids Under 18||Married with Kids Under 18|
|Within the next 6 months||4%||6%||9%|
|7-12 months from now||7%||10%||18%|
|13-24 months from now||17%||29%||20%|
|More than 2 years from now||72%||55%||53%|
|Note: Among Millennials (18-34 year old) who plan purchase a home|
So what’s holding Millennials back from homeownership? Money. Only 36% of Millennials are currently saving up to buy a home in the next five years. Most (52%) have their eyes on a new car, while others have shifted their priorities towards college tuition (35%), a trip of a lifetime (26%), a wedding (15%), retirement (9%) or an engagement ring (8%). Nevertheless, this generation remains optimistic with 87% believing that they will be able to purchase their dream home one day.
Most Americans Aren’t Dreaming About McMansions or Tiny Homes
Only a small subset of Americans (just 35% of homeowners) said they’ve already purchased their dream homes – that means an overwhelming majority are still searching for a perfect place to call “dream home”. In fact, over one quarter of Americans are regularly searching for a dream home online with 28% looking at least once a month. So what does the American dream home look like? Well, it really depends on how old you are.
In general, Americans aren’t big fans of McMansions or tiny homes. In fact, 44% want a home between 1,401 and 2,600 square feet – one that’s neither too small, nor too big. However, as people get older, their dream home gets smaller.
|How Big Is Your Dream Home?|
|All||Millennials (18-34 Year Olds)||Gen X (35-54 Year Olds)||Baby Boomers (55+ Year Olds)|
|800-1,400 square feet||10%||5%||7%||15%|
|1,401-2,000 square feet||21%||17%||18%||25%|
|2,001-2,600 square feet||23%||20%||24%||24%|
|2,601-3,200 square feet||14%||16%||15%||11%|
|More than 3,200 square feet||11%||12%||14%||7%|
Moreover, Millennials and Gen X gravitate towards modern homes, which can often have newer home amenities and technologies. Baby Boomers, on the other hand, want ranch homes (aka single-story homes that are typically more accessible and without stairs).
And contrary to what you might think, only 6% of millennials would prefer a high-rise penthouse. That said, they are still 6X more likely to prefer this type of home than any other generations – even those with kids under 18. Similarly, only 4% of millennials dream of converted lofts, while Baby Boomers have no affinity for converted lofts at all.
|What Does Your Dream Home Look Like?|
|Millennials (18-34 Year Olds)||Gen X (35-54 Year Olds)||Baby Boomers (55+ Years Old)|
|Modern Style Home||18%||22%||17%||16%|
|Victorian or Craftsman Style Home||11%||13%||12%||7%|
|Farm House or Log Cabin||10%||10%||11%||9%|
|Colonial or Southern Plantation Style Home||8%||8%||8%||7%|
|High-rise penthouse apartment||3%||6%||1%||1%|
|Note: “Other” includes options such as Mediterranean style home, townhouse and houseboat, as well as other.|
Americans Dream of Suburbs Over Cities
When describing where their dream home is located, most Americans wanted to live in the countryside (27%) and suburbs (27%) rather than in the heart of a major American city (8%). This was especially true for Baby Boomers and Gen X. But for Millennials, living a short commute to work (34%) and in a great school district (34%) were far more important that the actual location. But generational differences aside, there were some notable geographical preferences.
Top Dream Home Amenities: Decks, Gourmet Kitchens and Open Floor Plans
Americans love to entertain and eat. The top dream home features were social spaces where guests could gather and mingle, namely a backyard deck, open floor plan, or balcony with a view. Food-related amenities like a gourmet kitchen or vegetable garden were also popular. But as for private spaces, 44% of men wanted a man cave whereas only 17% women wanted a she shed (aka, a recreational room for the ladies).
|Top “Dream Home” Features|
|% of Americans Who Want This Feature||% of Homes Listed for Sale on Trulia as Having This Feature in the Last Year|
|Open Floor Plan||46%||3.9%|
|Balcony with a View||45%||1.3%|
Millennials, compared to any other generation, want it all. Given the option, 18-34 year olds would like all the latest and greatest amenities in their dream home – especially want a balcony with a view.
|Top “Dream Home” Features for Millennials|
|Balcony with a View||60%|
|Open Floor Plan||45%|
Generation X, however, followed the national trend with most wanting a backyard deck. The only variation was that 35-54 year olds preferred having a swimming pool over a vegetable garden.
|Top “Dream Home” Features for Gen X|
|Open Floor Plan||47%|
|Balcony with a View||46%|
Similar to Generation X, Baby Boomers want a backyard deck, open floor plan and gourmet kitchen. But unlike other generations, the 55+ age group has a green thumb with 37% wanting a vegetable garden.
|Top “Dream Home” Features for Baby Boomers|
|Open Floor Plan||46%|
|Balcony with a View||33%|
All in all, Americans are pretty realistic and practical when it comes what they want in their dream home. Most people aren’t looking for a grand mansion, tiny home or even a home with an iconic architectural style – they want a mid-sized, modern home in the suburbs with a backyard deck. This is likely because the dream of homeownership is largely driven by marriage and children. Having a duel income makes buying a home more affordable, while parents often want the stability that comes with owning a home. As a result, many would-be homeowners dream of finding a home where they can raise their families. Such is the game of life.
This survey was conducted online within the United States between May 26th and 28th, 2015 among 2,026 adults (aged 18 and over) by Harris Poll on behalf of Trulia via its Quick Query omnibus product. Figures for age, sex, race/ethnicity, education, region and household income were weighted where necessary to bring them into line with their actual proportions in the population. Propensity score weighting was used to adjust for respondents’ propensity to be online.
All sample surveys and polls, whether or not they use probability sampling, are subject to multiple sources of error which are most often not possible to quantify or estimate, including sampling error, coverage error, error associated with nonresponse, error associated with question wording and response options, and post-survey weighting and adjustments. Therefore, the words “margin of error” are avoided as they are misleading. All that can be calculated are different possible sampling errors with different probabilities for pure, unweighted, random samples with 100% response rates. These are only theoretical because no published polls come close to this ideal.
Respondents for this survey were selected from among those who have agreed to participate in our surveys. The data have been weighted to reflect the composition of the adult population. Because the sample is based on those who agreed to participate in our panel, no estimates of theoretical sampling error can be calculated.0 comments
Although home prices are rising faster in urban neighborhoods, population is growing faster in suburban neighborhoods. Consumer preferences and the aging of the population are tailwinds for suburban growth; so are falling oil prices if they stay low long-term.
How fast have cities and suburbs grown recently? During last decade’s housing bubble, suburbs and rural areas grew much faster than cities. But briefly, early in the housing recovery, it looked like the long suburbanization of America might go into reverse. For a moment in 2011, urban counties grew faster than suburban and rural counties. Since then, old patterns have returned. Suburbs are now gaining population faster than urban neighborhoods, even though home prices are rising faster in cities than in suburbs. And the trend seems likely to continue. Trulia’s latest consumer survey and projected demographic shifts point to future headwinds for urban growth.
To compare cities and suburbs, we classify individual neighborhoods as urban or suburban based on whether or not most households live in detached single-family homes (see note on methods and data sources). This definition better reflects how residents describe their neighborhoods than do official city boundaries. That’s because many neighborhoods within big-city limits consist overwhelmingly of single-family homes and feel more suburban than urban.
Prices Rising Faster in Cities, but Population Growing Faster in Suburbs
In the recovery, the home-price rebound has been stronger in urban neighborhoods. Most of the overbuilding during last decade’s bubble involved single-family suburban homes, and the single-family vacancy rate remains elevated. Comparing urban and suburban neighborhoods in the 100 largest metros over the past four years, urban home prices have consistently risen faster, or fallen less, than prices in suburbs. And, for the year 2014, the urban median asking price per square foot rose 8.1% versus a 5.7% gain in suburban neighborhoods.
However, during most of this period, suburban population growth has been faster than urban growth. In 2014, suburbs grew 0.96% and cities 0.85%, according to Postal Service data on occupied homes receiving mail. That’s not a huge difference, but it continues the trend of suburbs outpacing urban areas.
How can prices rise faster in urban neighborhoods even as suburbs lead in population growth? One reason is that most new construction takes place outside urban neighborhoods. Cities have less open land, and often more onerous regulations limiting new construction. It’s true that in 2014 multiunit buildings—typically located in urban neighborhoods—accounted for the highest share of overall construction since 1973. Still, in urban neighborhoods, fewer new units are built relative to the size of the housing stock. Limited construction holds back urban population growth and worsens urban affordability, even when—as rising prices show—housing demand in cities is strong. But what does the future hold?
Dreaming of the Suburbs and Beyond
In November, Trulia asked more than 2,000 American adults whether they lived in an urban, suburban, or rural area, and where they wanted to live in five years. We didn’t define urban, suburban, and rural, but instead left them open to interpretation. (See note.) Rural areas were the winner. Just 21% of respondents said they were rural residents, but 28% said they would like to be living in a rural area in five years.
Urban residents feel the tug of the suburbs. For every 10 suburbanites who said they wanted to live in an urban area in five years, 16 urban dwellers said they wished to live in the suburbs. Even among young adults aged 18-34— who are more likely to live in urban areas than older adults are—more wanted to move from city to suburbs than the other way around, though the sample size was small.
To put it another way: Urban residents were the least likely to want to live in a similar area in five years. Two-thirds (67%) of urbanites wanted to live in an urban area in five years, compared with 80% of suburbanites and 83% of rural residents who wanted to live in areas like where they were.
Urban living generally declines with age, which partly explains why people are less likely to want to live in cities in five years. But will the large millennial generation give urban areas a sustained boost? In other words, will the U.S. population’s changing age profile be a tailwind or headwind for cities?
The Demographic Urban Headwind
Today, urban neighborhoods are getting a demographic jolt. The largest segment of the big millennial group—folks in their early 20s—are entering the peak age for urban living. Some 26% of 22-24 year-olds live in urban neighborhoods, rising to 27% for 25-29 year-olds. Older people are far less likely to live in urban neighborhoods. Just 17% of the largest segment of baby boomers—those in their early 50s—live in such neighborhoods, a third lower than the share of early twentysomethings.
Comparing the 2009-2013 period with 2000, city living held up for people aged 25-44. Meanwhile, the share of adults 18-24 living in urban neighborhoods declined because they became more likely to live with their parents. But the most dramatic change in urban demographics concerned older adults. People age 45 and older were less likely to live in urban neighborhoods in 2009-2013 than in 2000. And the share of seniors in their 70s and early 80s living in urban neighborhoods fell more than 10 percent. In fact, for decades, seniors have become more likely to live in single-family homes. Increasingly, cities may be for the young. But that’s because oldsters are getting less urban, not because youngsters are getting more so.
What then will happen as the two largest groups age—those in their early 20s and those in their early 50s? As millennials get older, many will follow a familiar path: They’ll partner up, have kids, and move to the suburbs. Urban living starts to decline after ages 25-29 and drops to its lowest level at ages 65-69. On the other hand, the baby boomer leading edge is nudging 70, when urban living starts to rise again. The return of older boomers to cities will offset some of the millennial suburban migration.
Nevertheless, the aging population is overall a slight headwind for cities. Suppose the propensity of each age group for urban living remains at 2009-2013 levels. In that case, over the next few decades, the changing age distribution projected by the Census Bureau would lead to a slow, but steady decline in the share of adults living in urban neighborhoods. To be sure, the decline will probably be small—around a tenth of a percentage point per decade. Still, it suggests that aging boomers returning to cities might not fill all the homes suburbanizing millennials leave behind.
What could boost urban growth? For starters, more construction in city neighborhoods. That would allow higher urban population growth, while slowing price increases. Also, higher energy prices would encourage people to live closer to work and in smaller homes. By the same token, the recent drop in oil prices, if sustained, would have the opposite effect, becoming yet another tailwind for suburbs and headwind for cities. Finally, cultural attitudes could shift in favor of renting and urban living. But is that likely? Today, the vast majority of young renters aspire to own. Homeownership remains core to the American Dream. The future of the suburbs looks bright.
To compare “city” versus “suburb,” we classify neighborhoods as urban or suburban based on how dense or spread out the housing is, as we have done in previous Trulia Trends posts. Using Census data, we define urban neighborhoods as ZIP codes (technically, ZCTAs — ZIP Code Tabulation Areas) where a majority of the housing is apartments, attached townhouses, or other multi-unit buildings; suburban neighborhoods are those where a majority of the housing is single-family detached houses. We used this methodology rather than simply identifying the biggest city in a metro as “urban” and treating the rest of the metro as the “suburbs,” as other reports on cities-versus-suburbs often do. The problem with using city boundaries is that many neighborhoods outside of the biggest city are actually much more urban than some neighborhoods within a city’s boundary. For instance, our definition classifies Hoboken, NJ, Central Square in Cambridge, MA, and Santa Monica – which are all very dense – as urban neighborhoods, even though they’re outside the city boundaries of New York, Boston, and Los Angeles, respectively.
The urban vs. suburban comparisons of prices and population growth cover the 100 largest metros, with individual ZIP codes classified as urban or suburban. Price changes are year-end year-over-year changes in median asking price per square foot of homes listed on Trulia. Population changes are the year-end year-over-year change in the U.S. Postal Service’s count of addresses receiving mail, reported monthly by ZIP code.
The consumer data is based on a survey of 2,008 American adults conducted for Trulia on November 6-10, 2014, by Harris Interactive. Respondents were asked whether they lived in an urban, suburban, or rural area, without being provided a definition. Self-reported urban locations aligned better with our housing-stock-based definition of urban versus suburban than with official city boundaries, though race, for instance, had a statistically significant relationship with self-reported neighborhood urban classification, even after accounting for the housing stock, household density, and city population.
Data on urban residence by age group is based on the ZCTA population as reported in the 2000 decennial Census and the 2013 five-year American Community Survey, covering the years 2009–2013. Population projections by single year of age from 2014 to 2060 are also from the Census Bureau.0 comments
Between 2012 and 2013, population growth for 20-34 year-olds was highest in Colorado Springs and San Antonio, while Austin and Raleigh were tops for 50-69 year-olds. But New York, Washington D.C., and Boston all had among the highest growth for 0-4 year-olds.
This morning the Census released its 2013 population estimates by age group for counties, which reveals which local areas are gaining or losing millennials, boomers, and other age groups. Earlier this year, the Census released 2013 population estimates for the overall population – not broken out by age group: at that time we pointed out that the most urban counties had slower population growth than the more suburban counties, even though the most urban counties were growing faster than they did during the housing bubble. (This post and this article explored the broad urban versus suburban trends.)
Today’s new data tell us whether key demographic groups – like millennials (20-34 year olds), boomers (50-69 year olds), and young kids (0-4 year-olds) – might be bucking the broader trend of more suburban counties growing faster than the most urban counties. To measure this, we use the same approach of dividing all U.S. counties into four quartiles based on their household density so that each quartile includes around one-fourth of the total population (see note on county definitions and age groups). Going from the highest to lowest density, the four categories correspond roughly to (1) big, dense cities; (2) big-city suburbs and lower-density cities; (3) lower-density suburbs and small cities; and (4) smaller towns and rural areas.
The punchline: millennial population growth in 2012-2013 in big, dense cities was outpaced by big-city suburbs and lower-density cities and even by lower-density suburbs and smaller cities. Boomer growth in big, dense cities also fell just short of growth in the big-city suburbs and lower-density cities. But the population of kids under the age of 5 grew fastest in big, dense cities. Let’s take a look at each of the age groups.
Millennials Not Flocking to Big Cities
From 2012 to 2013, population growth for millennials (20-34 year-olds) was highest outside big cities. The fastest growth was in the second quartile of counties ranked by density (big-city suburbs and lower-density cities). Furthermore, the third quartile (lower-density suburbs and smaller cities) edged out the top quartile (big, dense cities) for millennial population growth:
From some angles, it looks like the housing recovery has brought an urban resurgence: for instance, the most urban counties are growing faster now than during the housing bubble, and many dense cities are having a boom in apartment construction. However, the most recent data show that asking prices in urban neighborhoods are rising only slightly faster than in the suburbs, and the suburbs actually have higher population growth.
The Trulia Price Monitor and the Trulia Rent Monitor are the earliest leading indicators of how asking prices and rents are trending nationally and locally. They adjust for the changing mix of listed homes and therefore show what’s really happening to asking prices and rents. Because asking prices lead sales prices by approximately two or more months, the Monitors reveal trends before other price indexes do. With that, here’s the scoop on where prices and rents are headed (see note #1 below).
Asking Prices Continue to Rise as Spring House Hunting Season Begins
Despite declining investor purchases and more inventory coming onto the market, asking home prices continued to rise at the start of the spring housing season. Month-over-month, asking prices rose 1.2% nationally in March 2014, seasonally adjusted. Quarter-over-quarter, asking prices rose 2.9% in March 2014, seasonally adjusted, reflecting three straight months of solid month-over-month gains.
Year-over-year, asking prices are up 10% nationally and up in 97 of the 100 largest metros. Albany, NY, Hartford, CT, and New Haven, CT, are the only three large metros where prices fell year-over-year, albeit slightly.
March 2014 Trulia Price Monitor Summary
% change in asking prices
# of 100 largest metros with asking-price increases
% change in asking prices, excluding foreclosures
|*Data from previous months are revised each month, so data being reported now for previous months might differ from previously reported data.|
The suburbs may have faster population growth, but urban neighborhoods have faster home-price growth nationally and in 16 of the 20 Case-Shiller metros. Furthermore, home prices are climbing most steeply in high-rise neighborhoods and areas with large gay and lesbian populations.
Home prices have been climbing nationally for more than a year. The Trulia Price Monitor, Case-Shiller, and other price indexes show price gains for nearly all large metro areas. But within a metro, the city and the suburbs are often totally different housing markets. In last decade’s housing bubble and bust, most of the overbuilding and foreclosures happened in the suburbs and outlying areas, but many downtowns are dotted with vacant buildings or even vacant blocks. Which areas are seeing a stronger recovery – cities or suburbs?
To answer this, we looked at (1) price gains, based on the change in median price per square foot among all non-foreclosure homes for sale on Trulia, and (2) population growth, based on the U.S. Postal Service’s count of occupied households in each ZIP code. Both measures are year-over-year, with prices through the end of May 2013 and population through mid-June 2013. We classify urban and suburban neighborhoods based on the kind of housing they have – urban neighborhoods are mostly condos, apartments, and townhouses, while suburbs have mostly detached, single-family homes – which we think is more accurate than using big-city boundaries (see note).
Urban Neighborhoods Have Stronger Price Recovery, but Slower Population Growth
Here’s the punch line: urban neighborhoods had faster price growth in the past year, while suburban neighborhoods had higher population growth. The median asking price per square foot was up 11.3% in urban neighborhoods, versus 10.2% in suburban neighborhoods. (The overall national increase, including urban and suburban neighborhoods, was 10.5%.) But despite faster price growth in cities (by williams here), the suburbs are where people are moving: suburban neighborhoods had faster population growth than urban neighborhoods did, 0.56% versus 0.31%.
|Change in home prices, Y-o-Y||Change in population, Y-o-Y|
But shouldn’t price gains and population growth go hand-in-hand? Not necessarily: there’s more room to build new housing for a growing population in sprawling suburbs than in dense urban areas, so suburbs can more easily accommodate growth with new construction. In contrast, the more people want to live in dense, urban neighborhoods, the more they bid up the price of existing homes. Even with the recent rebound in construction of urban multifamily buildings, most new housing is still in the suburbs.0 comments