1. Yes, this is a problem and does give the GOP a slight advantage in 2018 but it's definitely not enough to stop a 2006 style wave for example (just enough to mitigate even larger losses they otherwise would've had if Democrats were more geographically dispersed).
2. Also here's some interesting data on millennials moving to the suburbs in faster numbers than expected. Good article and good post. 
2006 is a long time ago. A lot of people still associated Bill Clinton and Other Moderates/Conservatives with the Democrats. Now they are associated with At the worst "The Far Left" and at best "Liberals".
Also in 2006 we were loosing 2 wars started by Bush; Oil pieces were through the roof, Housing prices were getting out of hand, Bush disappointed his base with a Moderate (Non-Conservative) SCOTUS pick and the GOP was pushing for amnesty for the illegals. A big part of why the Democrats won was because the GOP Base rebelled.
The current Democrat Coalition is mostly Minorities, College Students and Liberals. Except for the Liberals I don't
see the Democrats being able to turn out their Base (With the exception of Liberals) during a Primary.
Midterms are referendums on the sitting President. Right now Trump has a 38-39% approval rating and just failed to get his healthcare bill (which hovered between 12-19% approval) through congress. Right now the Democrats are leading by about 8 points according to the 538 tracker for 2018.
The GOP could save their majorities if they actually moved onto other popular agenda items like tax reform and infrastructure.
