Where Are Millennials Buying Their First Homes?
Millennials, as the largest generation of adults, are currently the center of attention for the U.S. housing market. The oldest members are now beginning to reach their mid-30s and financial stability — at least, hypothetically.
Millennials are often scrutinized for poor money mismanagement (see: avocado toast), but they’re often dealing with much lower entry-level earnings than baby boomers and are burdened by extremely high student loan debt figures.
When you think about it, it’s not a total shock. The average millennial makes $40,500 per year. Using that average, were one to save 15% of their income each year, it would take about 18 years to save enough for a 20% down payment on a home in Boston. And it would take about 32 years for a millennial to afford the average $112K down payment for a home in Los Angeles.
And this is why only 32% of Millennials — the nation’s largest generation — are homeowners.
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Top 10 cities for millennials homeowners
When you take a closer look at homeownership trends among this generation, those millennials who have been able to purchase a home have mostly done so in smaller, interior markets.
When it comes to the top-10 cities in which millennials are purchasing homes, it’s clear that those living on the coasts are much less fortunate. The top-10 cities for millennial homeowners are:
- Ogden, UT
- Grand Rapids, MI
- Des Moines, IA
- McAllen, TX
- Minneapolis, MN
- Scranton, PA
- Baton Rouge, LA
- Boise City, ID
- Detroit, MI
- St. Louis, MO
Of the cities that exceed the mark for the total percentage of millennial homeowners, only one place has a millennial homeownership rate of more than 50% — Ogden, UT.
Cities with the fewest millennial homeowners
On the other end of the spectrum, the cities with the fewest millennials owning homes is a list of some of the most expensive (for homeownership and rentals) in the country. The cities whose millennials populations are the least likely to own homes are largely the most expensive coastal cities or smaller college towns. The top-10 includes:
- Los Angeles, CA
- Honolulu, HI
- San Diego, CA
- New York, NY
- San Jose, CA
- San Francisco, CA
- Fresno, CA
- New Haven, CT
- Madison, WI
- Durham, NC
These highly populated environments usually have much higher rental rates as well, making living situations for young professionals in these cities very complicated and financially stressful.
When taking a look at the last 10 years of young-adult homeownership rates, it’s no surprise to see millennials struggling to purchase their first home. Whether it’s mortgage rejection or insufficient funds for a down payment, young people throughout history have been buying houses at slower and slower rates. In fact, in 2005, 40% of young adults were homeowners. In 2015, only 32% owned homes.
Young adults have, in the past, accounted for a much larger portion of U.S. homeowners than they do today. College student debt, lifestyle flexibility choices, career opportunities and an increasingly tight housing market are pushing back the age of first-time homebuyers.
Giving up on owning a home
In many markets, millennials are shrugging off the idea entirely. Often, this group of motivated young professionals prefers the services and amenities of large apartment complexes and buildings without the burden of repair and ownership investments.
Whether millennials are renting by choice, struggling to afford the down payment on a new home, or simply working to pay off debt before making a huge purchase like a home, it’s clear that homeownership rates for millennials are coming along a bit slower than for previous generates. But you never know, this could be a calculated and beneficial move in the long run.
Sam Radbil is an author at ABODO Apartments, an apartment marketplace website that makes apartment hunting easier for people all across the country. Check out their available apartments in Columbus, OH and follow along on Twitter at @ABODOapts.