So what exactly is the suburban millennial paradox? I decided on this title because it best described what I would like to think about as a major shift in home buyer preferences from the boomer/genX generations to the millennials.
For those in the older generation who think that they don’t need to care about millennial preferences, guess again. The value of the home you are hoping to cash out of in a few years will depend upon what the millennial generation prefers and whether your home and your neighborhood fits the bill.
Putting the discussion in perspective…
Out the outset, let me state the obvious. Almost ALL areas of Westchester are seeing market appreciation in single family homes. But there are several towns and villages that have completely recovered from the housing recession and are sprinting ahead of the pack while others are still below their high-water marks of a housing boom that peaked 10 years ago.
The towns I chose were deliberately close to each other geographically, with a similar commute, although the communities represented have diverse price ranges, which was intentional.
Some suburban areas are booming…
Larchmont had barely hit bottom in 2009 before it started roaring back to life. According to the MLS, Larchmont/Larchmont P.O. prices have jumped 49% from their market lows. Last year, the median price for a house sold in Larchmont was $1,347,000, which is actually 21% higher than its pre-recession high of 2008.
Although not as dramatic as Larchmont, other suburban areas of lower Westchester that are appreciating at a healthy clip include (but are not limited to) Mamaroneck, Scarsdale, and Rye City.
These areas have recovered completely from the housing recession by exceeding their pre-recession market highs.
The chart below, derived from the HGMLS shows this 10 year trajectory ending with the final numbers from 2015:
Other areas are still in recovery mode…
Other towns are still struggling to get back to where they were before 2008 even though some of these areas were sizzling hot prior to the financial crisis. They are moving up in price at a steady pace, kind of chugging along, but they don’t have the mojo that other areas have. Some interesting examples include Rye Brook, Harrison and White Plains.
In 2015, the median price of a home in White Plains was $617,500. That’s down 8% from the market high that was reached in 2006, but a good 12% up from the lows of 2011. A steady 3% a year isn’t small potatoes, but comparing that to the massive rise seen in a place like Larchmont, one has to wonder why.
Rye Brook is up 23% from the lows of the recession, but is only about halfway back from where it was before the housing crisis. The median price for 2015 was $733,000.
Harrison has more than one Post Office address:
The Harrison P.O. of Harrison is still well off its pre-recession highs of $1,382,000 in 2008. Although off its lows of $875,000 in 2011, its median price has been gyrating from the $900k+ to $1,200K + for a couple of years.
The Purchase P.O. had median prices briefly touching $2million, but the 2015 median price of $1,295,000 is well off those highs.
The Rye P.O. in Harrison peaked in 2008 at over $3 million though that was probably an anomaly due to low volume. A fairer high point would probably be about $2,250,000. Still, the median price for 2015 was $1,700,000 shows that the market is going up, but hasn’t fully recovered.
The chart below, derived from the HGMLS shows this slower 10 year trajectory ending with the final numbers from 2015:
So, what goes on here?
Why are some areas zooming ahead while others just chug along with slow but steady gains? Some, particularly White Plains, were white hot before the recession hit.
Is it a 1% issue?
It is well-known that the 1% are doing a lot better than the rest of America. Would the squeeze on the middle class provide a good explanation?
Certainly, the boom towns are 1% havens. Such an explanation might explain some of the White Plains numbers because White Plains is known for its diverse housing stock. But that would not explain what is happening in Harrison or Rye Brook.
Is it a school issue?
By law, I am not allowed to discuss schools. But by going to any website that rates schools, it is difficult to see with the mixture above that schools and/or test scores are the common thread.
Is it the suburban setting?
Now I think we may be getting somewhere.
For White Plains, there is some single family downtown housing, but the bulk of its suburban ring grew _around_ the city, not in it. Harrison and Rye Brook are very suburban, with very little urban core. They tend to be car-dependent areas with larger lots and cul-de-sacs. A truly suburban lifestyle is the common thread that runs through most of the neighborhoods in each of these areas.
Also, If you look at the areas that are sprinting away from the pack in appreciation, they are small villages, but they have a decent core to them and their small size makes them walkable. Larchmont, which has been the big winner in this regard, is the poster-child of walkability. Its small size makes walking to town and train easy for most residents, and the train ride itself is just 35 minutes to Grand Central Station.
And we return to the millennial generation…
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Millennials are the generation who will have to soak up the current suburban inventory. So we need to look at the needs of this generation. They have to do their share to adopt to suburbia and make some compromises but local municipalities have to do their part to adopt to them.
Cities and towns need to do what real estate agents do every day. We have to put ourselves in the shoes of our home buyers.
The millennial generation has had a different life experience from the boomer/genX generations. Their preferences and needs are based in a different reality.
They were told to get a good education and that education put them into far more debt than previous generations. Jobs that pay the bills and pare down that debt are far harder to come by then they were for the boomer/X generations. They are working longer hours then we would ever have found acceptable. Trying to balance this harsh financial and work reality with family life is pushing them towards a more walkable environment where convenience reigns supreme. They need an environment that maximizes their down-time and family-time.
This means smaller homes, with lower utility bills and less general up-keep. That includes a smaller, less time consuming property, a commute that is as easy and seamless as they can possibly make it. Time has become their most precious commodity. Anything that wastes it is a no-go.
In my next installment… I will discuss my concerns about this bifurcation of neighborhood popularity and what municipalities and citizens can do to realistically accommodate the needs of the next generation of home owners.
© 2016 – Ruthmarie G. Hicks – https://thewestchesterview.com – All rights reserved.
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