Millennial buyers accounted for more than a third of all home purchases in 2017, but the most competitive housing markets in the country do not have much room for them. According to the National Association of Realtors (NAR), “young home shoppers are relocating to more affordable parts of the country” when they decide to purchase a home rather than continue renting. The NAR defines Millennial households as those headed by individuals born between 1981 and 1996.
Although cities like San Francisco, California; Austin, Texas, and Brooklyn, New York, make headlines for being “Millennial hotspots,” when this generation is ready to buy, they look in secondary markets. “It comes down to what they can afford,” explained real estate agent Roger Ma in an interview with Realtor.com. “They might have started their careers in very expensive metro areas…but as they age, they often want to settle down and look for a home in a reasonably priced location.”
Investor Insight: If you want to sell to Millennial buyers, be sure you are located in areas where they can afford to buy. Otherwise, you may be in a prime position to rent to them.
The NAR used Pew Research Center’s definition of Millennials in conjunction with information from mortgage lenders to identify markets with the largest shares of mortgages made to Millennials. Along the way, analysts discovered that the 36-percent share of mortgages made to Millennials were nearly two-thirds also to first-time homebuyers. Here are the top three markets for Millennial homebuyers by mortgage volume:
- Appleton, Wisconsin:
This city has a median home list price of $150,000, and 57 percent of mortgages made in the area in 2017 went to Millennials. Analysts speculated that in addition to affordability, Appleton offers move-in ready residences, a short commute to the city center, and plenty of entertainment and recreation opportunities. - Des Moines, Iowa:
In Des Moines, the median list price is $294,000, but that did not slow Millennial borrowers down in 2017. 56.9 percent of mortgages made in Des Moines last year went to Millennials, for a near tie with Appleton. Des Moines agents say that although homes are relatively expensive in the area, first-time buyers are taking active advantage of low-down-payment mortgage loans that enable them to put down less than three percent. - Utica, New York
8 percent of 2017’s mortgage loans in Utica went to Millennials taking advantage of affordable home prices hovering just over $139,000. For less than $100,000 more (still less than Des Moines), buyers in the area can enjoy huge homes complete with luxury landscaping and koi ponds. Utica is not a bedroom community for New York City, however. That commute would be nearly five hours.
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