Millennials, boomers drive homebuying in the county
There’s a race for affordable, low-maintenance new housing in Chesterfield County, and it’s pitting one generation against another. The first wave of millennials are finally putting down roots and buying new homes in the county, just as their parents are trading in their family homes for smaller units.
According to local homebuilders and developers, millennials and baby boomers currently account for most new home sales in the county and are expected to drive the market for the next decade.
Millennials, those 36 and younger, represent the largest share of homebuyers in the country at 34 percent, according to the National Association of Realtors. It’s a trend that’s taken a while to materialize, however. Millennials tend to put less of a priority on marriage, according to the Pew Research Center, and marry later in life. But millennial women now account for the majority of children born in the United States.
Parenthood is prompting many older millennials who live in the city to rethink their housing choices and move to the suburbs in search of better schools and safer neighborhoods, real estate observers say.
“Once they hit that stage of life where they’re married and looking to have a child, they become like everyone else: They want a safe, nice home to raise their children,” said Tom Page, vice president of iStar. iStar is the developer behind Magnolia Green, one of the county’s top-selling new homes communities. With its mix of housing styles and price points and family-friendly amenities, Magnolia Green is attracting a good number of millennials who are ready to trade in their Saturday night barhopping and art walks for soccer games and PTA meetings in the suburbs.
“When they’re first coming out of college, they generally gravitate to the downtown areas where there’s a lot of nightlife and bars and restaurants, and it’s just a fun and cool place to live, but when they marry and have their first child, …[their] first question is, ‘Where do I want my child to go to school?’ ” Page said. “The great school system we have in Chesterfield County is our biggest asset with that group.”
With its top-rated schools and award-winning neighborhoods, Chesterfield County is a natural fit for young families. But homeownership will not come easily for most millennials – many of whom have already faced down the challenges of an almost decade-long stagnant job market and exploding student debt.
“To get into the new homes market, they have to be able to afford a little bit more than a first-time homebuyer [has in years past],” said M. Craig Toalson, CEO of the Home Building Association of Richmond. “When you think about the price of a first-time home, it’s [generally] between $150,000 to $250,000. Unfortunately, the majority of builders aren’t able to build a product in this price range. If they could, they would. There are 80 million millennials in America that need this type of housing.” The rising cost of materials, increasing regulation and a lack of available land are driving up the cost of entry-level homes in the county. Few builders are able to offer single-family homes for under $250,000, so that’s leading to more demand for lower-priced townhomes and condominiums.
“The ones that can afford it will buy a single-family home, but the ones who can’t, they still want the American dream, so they’re willing to start with a townhome and build up some equity and move from there,” said Pat McCarthy, division manager for HHHunt Homes Richmond.
At the other end of the spectrum are the aging baby boomers, many of whom are in the process of selling off their larger homes and lots (and all the upkeep they entail) in exchange for lower-maintenance housing. This means millennials are competing against their parents’ (and for some, grandparents’) generation for the limited supply of townhomes and condominiums being built in the county. “Chesterfield County needs to continue to encourage more high-density products, more mixed-use products,” Toalson said. “The millennials tend to like a low-maintenance product. They typically don’t want to jump right into an acre lot that they have to maintain with a yard and everything else. They really value accessibility, walkability, energy efficiency, durability – everything that makes people feel good about their home – and they’re willing to spend a little more to get that.”
The question is if and when millennials will be able to afford to make their dream of homeownership a reality. Housing prices in the county are steadily rising each year. Interest rates are ticking upward, too, while salaries have been slow to increase. That leaves the millennials with few options: Take a chance and buy a new home that might be at the top of their budget, buy an older home that may or may not meet their needs, or sit tight and hope for better days ahead. ¦