I think there is always a leap to conclusions/generalizations when it comes to these topics, but as an older Millennial I do think there is some truth to this. Trends and values are changing, if not dramatically.
1. Fewer people are having kids, and those who are having kids are having fewer of them.
Statistics show that fewer people of child-bearing age are married. Those who do marry get married later, shortening the natural fertility window. (Obviously having kids outside of marriage happens too, but those households are even less likely to fuel the market for large suburban estate homes). It's more acceptable today for married people of child-bearing age to simply opt out of parenting.
For some anecdotal evidence:
I'm 34, married, an affluent urban dweller, and "childfree." (The emergence of that term alone speaks volumes.) I have MANY childless female and male friends, both single and married, who are in their mid/late 30s and even 40s. Some of them are happily career focused; others long for marriage and family but find modern dating challenging. Some with partners plan to have kids "some day," but a subset of those will find themselves unable due to age by the time they start trying. Those who do have a child (often through expensive IVF or other procedures) will often have fewer kids than past generations, due to preference, cost or just timing. My own mother doesn't even give me a hard time about having kids; many older women I know who have kids (and who don't) openly caution me that raising kids isn't all it's cracked up to be or joke that it's a trap. More often than not when I tell people I don't have kids, they nod approvingly or knowingly. Obviously this is anecdotal, but in short the pressure/expectation to have kids has lightened tremendously over the last generation.
2. Housing preferences are changing.
It's definitely true that many Millennials will form families, and many of those families will prefer traditional suburban homes. But there are a few trends that I think may dampen the demand.
--Two-career households. When just the dad had to commute into the city it was one thing, but with more women in the workforce and more married couples consisting of individuals who both have a career, commuting becomes much more of a drag both in terms of cost and time. In my urban neighborhood I'm seeing a lot more strollers and young kids. Often people move to the burbs for schools when the kiddos hit elementary or middle school age, but many couples are delaying as long as possible, both to save money and commuting hours.
--Modern and minimalist style. Many millennials prefer and have invested a lot in more modern and minimal designs when it comes to furniture, art, and other household belongings which don't translate well to large suburban homes. Rooms devoted to single activities (formal dining, library/study, breakfast room, media room, sunporch, etc. ) don't make a lot of sense, especially when they require large investments in new, often oversize furniture to fill the space. Even stuff we can get for free from our downsizing parents isn't appetizing: multiple sets of china and crystal (and pantries or cabinets to house it all), heavy bookcases, beds, end tables and bedside tables, and so on just seem pointless. My husband has twice insisted that we don't have room for a grand piano when various relatives tried to give us one upon death or downsizing. I would have squeezed it in, but the truth is it wouldn't get played and would dominate our townhome's living area. Unless you're one of the few Millennials having 3+ kids, you just don't need all the space in a huge suburban home.
3. The decline of community ties.
Many people don't know their neighbors anymore anyway - so what does it matter who they are? Kids fill their summers and afternoons with classes and camps and scheduled activities; no one is allowed to play outside freely so who cares which kids live on your street?
Sure, location matters in terms of proximity to the things you plan to drive to and aesthetics, but with fewer stay at home parents and more in-home technology, there are also fewer ties to specific communities and neighborhoods and even cities. Bowling leagues, civic and volunteer groups, political action committees, even churches in many areas - to the extent that they still exist, they are increasingly comprised of older/retired members. So rather that stretch financially to get into a neighborhood and "put down roots" and stay for decades, some younger families may opt to save money and stay in urban areas or opt to live in smaller homes in the suburbs.
"An investment in knowledge pays the best interest." - Benjamin Franklin