Millennial Demand, Rising Land Prices Are Making U.S. Cities More Expensive

San Francisco painted ladies skylinecredit: Samuel Wantman

Millennials are fueling housing demand in some of the country's largest and most expensive cities, resulting in ramped-up development in urban markets and a pullback in housing construction in the suburbs.

That is according to a recent BuildZoom analysis that said housing construction in cities such as New York City, San Francisco and Boston is booming more than usual while construction in the suburbs has slowed, the Wall Street Journal reports. This demand, coupled with expensive building costs, continues to boost housing costs and rents in urban markets.

A lack of available land in American urban centers is exacerbating the problem, BuildZoom chief economist Issi Romem told Bloomberg. Romem said the limited amount of available land in downtown neighborhoods is expensive and leads developers to build luxury apartments to cover costs. Romem added that it is unlikely affordable housing will make a comeback in thriving urban areas until officials rewrite zoning codes to allow denser construction.

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