We are excited to announce that Jonathan Miller, who has long authored the most authoritative report on the residential real estate market, is partnering with The Real Deal. Below, you’ll find his Housing Notes column, which will now run on our site several times a week. In addition, Miller’s quarterly report for New York City, which he published through Douglas Elliman for more than three decades, will now be “The Real Deal report, prepared by Jonathan Miller.” Miller’s data venture, Streetmatrix, which provides hyperlocal data, will provide statistics to TRD Data subscribers.
— TRD editors
Generational housing motives going through stages
Last week, I spoke at a luxury housing market event in Manhattan and was asked to discuss how different generations view the current housing market. When it comes to that topic, I tend to pull out my old chestnut, “my wife and I raised three Millennials and a Gen Z but we don’t profess to understand any of them.” To help, I created this table using AI to explore the different motivations driving each generation in the housing market.
Boomer vices are dropping
As a boomer, I was raised in the ‘70s and ‘80s on the idea that the population would grow so fast that by the time I had a family, there wouldn’t be enough food for everyone, the oil reserves would run dry, and everyone would be riding bicycles like in the movie “Idiocracy.” Society was generally railing against many vices that my Boomer generation seemed quite prolific in, and even with double-digit mortgage rates, consumers still managed to purchase housing.
As we go through one of the most significant housing affordability challenges of the modern era, most of the vices my boomer generation grew up with in excess: sex, booze, drugs and rock ‘n roll are collapsing. But the trade-off seems to be housing affordability. I’m not making a cause-and-effect argument here; I just find it interesting.
Younger generations are thinking more clearly, free of the fog of the many bad decisions my generation was chock-full of. They have a much better attitude about credit and debt, and still see housing as a good long-term investment, but are becoming more priced out of homeownership, and the odds of attaining homeownership are falling.
Real estate maintains the long-term view
How does this affordability disconnect get resolved?
It’s definitely not “more drinking.”
Because the Fed held interest rates too low for too long, listing inventory was wiped out, and even with mortgage rates more than doubling after the pandemic, this has enabled home prices to keep rising. Here are some macro solutions; many are not within my bailiwick but on my list, and I’m sure there are hundreds of more effective ideas. It’s really not exclusively all about just “building more housing because we seem to be building the wrong kind of housing to improve affordability:
- Zoning reform and density: Relax single‑family zoning, allow mid‑rise apartments and “missing middle” (duplexes, 4‑plexes, small multifamily) in more neighborhoods, reduce minimum lot sizes, allow mixed‑use and enable more housing near jobs and transit.
- Accessory dwelling units (ADUs): Legalize ADUs by right on most single‑family lots and relax parking rules.
- Faster, predictable permitting: Strict timelines, and remove excess layers of discretionary review to cut carrying costs that get baked into rents and prices.
- Public land and air rights: Consider public land and prioritize it for affordable or mixed‑income housing, and use air rights transfers to add density while funding affordability. NYC seems pretty good at this.
- Industrialized construction: Support modular, panelized and other industrialized methods to reduce per‑unit costs. We just can’t seem to wean ourselves off of bricks and sticks.
- Land value taxation and reform: Shift some property tax burden from structures to underlying land to discourage land hoarding. Remember that land appreciates while improvements depreciate.
- Pricing underused and speculative holdings: Higher property taxes or surcharges on long‑term vacant units, underused high‑value land. Tax speculation more than actual use. Revisit tax expenditures that privilege certain investment behaviors (e.g., 1031 exchanges can encourage speculative holding of residential assets).
- Better alignment of zoning and subsidies: Combine zoning liberalization with targeted subsidies rather than treating them separately to avoid situations where subsidies simply capitalize into higher land prices. We saw this in Manhattan with the 421a tax abatement, where the proceeds were baked into higher land values, with no real affordability benefit for home buyers. Landowners priced it into their values, and without it, developers couldn’t make the numbers work.
- First‑time buyer and renter tax credits: Replace or supplement headline tax preferences with better‑targeted, progressive credits for first‑time buyers or long‑term renters, tailored to local price‑income conditions. We saw this supercharge the housing market after the Global Financial Crisis (GFC).
- Tying infrastructure money to housing outcomes: Condition transportation and infrastructure funding on zoning reform and production, especially near transit and job centers, to improve effective affordability in the local market.
- Data, transparency, and evaluation: Build better national and regional data on permits, completions, rents, ownership and evictions and rigorously evaluate reforms (e.g., Minneapolis upzoning, CA ADU laws) to enable policy iteration quickly. Perhaps my favorite suggestion!
Final thoughts
Today’s housing crisis reflects a structural affordability disconnect: Millennials and Gen Z are more disciplined with debt and still value homeownership, but are increasingly priced out, while Boomers hold substantial housing equity after decades of appreciation. Years of ultralow rates wiped out inventory and kept prices climbing even after mortgage rates doubled, exposing how zoning, permitting, tax policy and “bricks and sticks” construction have delivered strong asset performance but limited access. Instead of just “building more,” it calls for policy-heavy fixes such as zoning reform, ADUs, industrialized construction, land‑value taxation, better‑targeted credits and tying infrastructure funds to housing outcomes, underpinned by much better data and rigorous evaluation of reforms like Minneapolis upzoning and California’s ADU push.
If housing is a vice like rock ’n roll, the problem isn’t that Millennials and Gen Z turned the music down, it’s that we never bothered to build a bigger venue. Ha.
The actual final thought — This is why we can’t divide by zero. It’s complicated, so we need to write down the solution.
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