Location is everything: Millennials and DC real estate

Millennials are now the largest group of home buyers, but what are they looking for?

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Arlington, VA, about five miles outside of D.C., was recently ranked the best city for millennials in 2017, according to Niche.com.

The website uses key factors as criteria for why a millennial would want to live there, such as affordability, job prospects, and lifestyle choices such as access to bars and restaurants.

Though Arlington was ranked highly for affordability, the District itself did not fare so well. 

Owning vs. renting

Just a couple of years ago, fewer millennials owned homes than previous generations, according to Pew Research. Thirty- six percent of U.S. millennials lived with their parents in 2012.

But times are changing, and millennial homeowners are on the upswing.

Bloomberg reports that now millennials are “leaving the basement to buy homes.” Some of the reasons for rising millennial homeownership include rising rents, a strengthening economy and “household formation,” which Bloomberg says is due to the decline of the credit crisis.

“They often choose to rent in a location they wouldn’t be able to afford to buy in.”

Allison Goodhart DuShuttle is a lead agent at the Goodhart Group, a DMV-area real estate agency that has a millennial focus.

“The millennial market in DC and the closest walkable, urban suburbs is competitive,” DuShuttle said. “Millennials want to be able to walk to restaurants and bars, and also want space to entertain at home. Entertaining is important to millennials and often where they would be able to afford to buy is off-the-beaten path. So they often choose to rent in a location they wouldn’t be able to afford to buy in.”

DuShuttle said one rental trend is more luxury apartment buildings going in downtown.

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“We’re seeing a lot of new construction; luxury apartment buildings that are charging pretty high rents, and getting them. I think the goal for those is to make life as easy as possible, so a gym, a rooftop pool, areas where they can entertain,” DuShuttle said.

Overall, many millennials are on the fence about whether they should buy or rent, according to DuShuttle.

“They want to buy, they know it’s important, but what they can buy might be a really tiny place on the edge of a neighborhood, and all their friends are renting in one of those really cool buildings. So, they almost feel like they’re downgrading in order to buy,” DuShuttle said.

Location, location, location

A problem for millennial buyers is they’re competing with cash buyers looking for similar properties. Younger buyers don’t always have access to the cash that older buyers have. Not only are young buyers competing with builders looking to do complete renovations, according to DuShuttle, but there are also downsizers moving from the suburbs back into the district, and those people “typically have more cash on hand.”

DuShuttle said a lot of new buildings play up the common spaces a little bit more than they used to, in order to solve the “size versus location” dilemma.

Metro access is important to some people but not the majority, according to DuShuttle. A lot of people still drive to work, and they’re willing to be further from work to be closer to restaurants and bars.

“We see a lot of people who might work in Reston or Tyson or Arlington and decide to still live in DC or in Old Town, even though the commute isn’t ideal for them, and they could get a much bigger place closer to their work but they still want to have that walkability,” DuShuttle said.

The “new” starter homes

According to a report from the real estate website Zillow, millennials are the largest group of homebuyers in the U.S. right now. But the days of small starter homes are over. Millennials wait longer to buy, but when they do finally buy, they buy big.

Millennials often rent until their 30s, and the first house they purchase is around a million dollars, according to Business Insider.

“First, they’re in a one-bedroom condo in Dupont, and then they’re buying a townhouse in Old Town, and then they’re buying a single-family house in their mid-30s,” DuShuttle said.

“So I think the starter home isn’t really the starter home anymore, its people’s second or third house at this point,” DuShuttle said, which is a big shift from previous generations.

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