Briggs: Indianapolis has a millennial problem that luxury apartments can't solve

In the future, millennials will live pretty much where their parents did: in the suburbs.

U.S. Census Bureau data released Thursday delivered yet another counterpoint to smug 20-something urban dwellers who like to lecture about neighborhood density and car-free lifestyles (confession: I used to be one). The latest numbers show Indianapolis' population growth is flattening as people discover anew that suburbs are nice, if not inspiring, places to live.

Indianapolis' population last year grew by an estimated 2,869 residents to 855,164, as the city fell from the 14th-largest in the U.S. to No. 15. The city's recent population growth has slowed to an average of 3,200 residents per year over the past two years, down from 6,775 between 2010 and 2014.

Meanwhile, 13 of the 15 fastest-growing cities in Indiana last year were suburbs of Indianapolis. Among cities with at least 5,000 residents, Whitestown led the state with a growth rate of 9.2 percent, followed by McCordsville at 7.2 percent, Bargersville at 4.2 percent, Westfield at 3.6 percent and Carmel at 3.4 percent.

Carmel, the posh Hamilton County suburb that Indianapolis residents love to hate, added 2,977 people, more than any other Indiana city.

This isn't just an Indianapolis trend. Between July 2015 and July 2016, most of the 15 fastest-growing cities in the U.S. were suburbs, including six Texas suburbs.

The number of millennials moving from cities to suburbs is outpacing their migration to cities. Population growth in big cities has slowed in each of the past 5 years, while it has surged in the counties that surround those cities.

"A lot of cities experienced what Indianapolis saw a few years ago, which was an apartment boom," said Matt Kinghorn, senior demographic analyst at Indiana University's Indiana Business Research Center. "Part of that was supposed preferences of younger adults, as well as the residential construction industry was focused on multifamily, as opposed to new subdivisions, in the wake of the housing bust."

The apartment boom isn't quite over. Developers are expected to complete more than 1,000 new apartments in Downtown Indianapolis this year. Yet, the latest Census numbers point to a correction when it comes to housing choices.

"We're seeing the older trends take hold again, whereas suburban communities are starting to see a little more growth," Kinghorn said. "Some of the older patterns are coming back into play."

A 2016 paper published by Dowell Myers, an urban planning professor at the University of Southern California School of Policy, Planning and Development, argues that inner cities hit "peak millennial" in 2015.       

Myers acknowledges there is "evidence of difference" that suggests millennials favor cities at higher rates than previous generations did. But, he adds, it's unclear how tightly America's largest generation will cling to its love of cities when faced with the realities that urban neighborhoods have higher housing costs and lower-performing schools than suburbs.

It's one thing to pay $1,500 a month for a 1,000-square-foot Downtown Indianapolis apartment when you're a couple years out of college. It's another to pay that $1.50-per-square-foot premium to rent an apartment that's large enough to accommodate children.

Contrary to long-held assumptions, recent reports have shown millennials are interested in buying houses. That doesn't bode well for downtowns.

The recent dearth of for-sale construction in Indianapolis has contributed to a housing market in which inventory is tight and people are tripping over themselves to bid on any home that becomes available near Downtown. That forces people who prefer urban living to reevaluate their priorities.

As of April, there were 2,951 houses for sale in Marion County, a 27.7 percent drop from the previous year, according to residential real estate brokerage F.C. Tucker Co. The county's average housing price climbed by 7.5 percent to $151,921.

Although inventory also has plummeted in the suburbs, the doughnut counties still offer a lot of options. But there's virtually nothing for sale in Downtown Indianapolis that could be considered affordable for a household earning the city's median income of $41,987.

Jed Kolko, the chief economist for Indeed.com, described one of the greatest challenges facing cities in a post for The New York Times.

"This combination of faster population growth in outlying areas and bigger price increases in cities points to limited housing supply as a curb on urban growth, pushing people out to the suburbs," Kolko wrote. "It’s a reminder that where people live reflects not only what they want — but also what’s available and what it costs."

Those millennial trend stories you've been reading — and that I've written — were not entirely wrong. But they seem to have overestimated how loyal single 25-year-olds would remain to cities once they became married 30-year-olds.

Millennials moved to cities, in part, because they wanted to walk to work and drink craft beer on sidewalks with their friends. But now they're growing up and performing the cost-benefit analysis.

These millennials might want to stay in their cities. But the luxury apartments that attracted them Downtown won't be enough to keep them there.

Call IndyStar business columnist James Briggs at (317) 444-6307. Follow him on Twitter: @JamesEBriggs.