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A flurry of financial obstacles and lifestyle choices are stalling the journey to homeownership for many young adults, but becoming a homeowner is currently more feasible in some less expensive metro areas with steady job growth and lower qualifying incomes needed to buy.
New research by the National Association of Realtors analyzed employment gains, population trends, income levels and housing conditions in the largest 100 metropolitan statistical areas to identified the best purchase markets for millennial homebuyers.
Lawrence Yun, NAR’s chief economist, said that although millennials have made up the largest share of buyers for three consecutive years, sales to first-time buyers and the homeownership rate for young adults under the age of 35 remain depressed at levels not seen in decades.
This is despite historically low mortgage rates, escalating rental costs and low unemployment levels among those with a college education.
“Even with potentially higher incomes, prospective millennial homebuyers residing in some of the most expensive cities in the country face the onerous task of paying steep rents while trying to save for an adequate down payment,” he said.
“However,” he added, “for those currently living in or looking to move to a more affordable part of the country, there are metro areas right now with solid job growth and that offer a smoother path to homeownership.”
The top 10 metro areas NAR identified were chosen for their above-average share of current millennial residents and recent movers, favorable employment opportunities and relatively low qualifying incomes needed to purchase a home.
None is in California.
NAR’s study found that the best purchase markets for millennials buyers currently are (listed alphabetically):
Austin, Texas; Charleston, S.C.; Denver; Minneapolis; Ogden, Utah; Portland, Oregon; Raleigh, N.C.; Salt Lake City; Seattle, and, Washington, D.C.
Other markets NAR identified for having promising potential for millennial homebuyers include: Boston; Dallas; Des Moines; Jacksonville, and, Nashville.
According to Yun, during the early stages of the economic recovery some of the largest metro areas, such as New York and parts of California, were attractive to millennials for their strong job markets, but their higher costs of living made it difficult to buy.
Now that many more affordable, middle-tier cities have mostly recovered from the downturn and are once again experiencing robust job growth, millennials moving to some of these cities will likely realize they’re earning enough to purchase their first home.
“An overwhelming majority of young renters recently said they eventually want to buy a home,” added Yun. “As long as new and existing-home supply keeps up to meet demand and holds prices from rising too quickly, these identified areas are poised to lead the way in helping millennials realize their American Dream of becoming a homeowner.”
I think he looking out for California’s long term interests. He see the stats showing the gae of people leaving this state. Really hard to blame the young people either. Can you imagine paying $2500 for a one bedroom apartment?
Kathleen,
Two of my children and their children are in Texas and doing very well. The other two are here and thinking about going there.
And in other news, 2 + 2 = 4
Little do my kids know, my wife and I have a secret plot to follow them wherever they land..!
@KR. Are you kidding, high density, low cost housing on the Costco site?? I know of some prime hillside property in vintage hills that we can now build those same housing units on now that measure K has been passed, I’m wanting my kids to be able to buy in a better neighborhood, not down in the flatlands!!
The problem is that road (structure) being built to get to those homes in the valley, this is going to haunt us for a long time!
Change the title to – “People will less money prefer to live in cheaper areas”
Yes, Map, roads are bad.
If we didn’t put in roads, we wouldn’t have to worry about people living in Pleasanton and it would go back the way it was millions of years ago.
NO KIDDING! TOO EXPENSIVE HERE. I saw a posting on the PW Express where people are already opposed to allowing a new Governor sponsored bill that would streamline new housing because of the housing shortage! Where are the millennials to live unless they move OUT? I looked at the proposed bill and new housing proposals would still need to conform to the General Plan and Zoning Codes, plus allow 10% of the units to be affordable which is already the case here in Pleasanton. Obviously NIMBY-ism has created the problem because of selfish-ness and failure to admit to ourselves that our population is growing. The old people and millennials who want to live at mom and dad’s house until 35 can have Pleasanton.
You must not see all the apartments going in already on Bernal and by BART, and yes, the city fought it trying to keep a small town feel. And there is affordable housing near the new Safeway and by Hearst elementary and the race track I think, although I haven’t kept track of those properties. Maybe something changed. Affordable housing projects are fine as long as it is done through smart planning. People are fighting the new Costco plan–that could be a spot for high density, low cost housing. As to the Governor’s plan, he would have housing jammed everywhere and ruin this and other communities, which isn’t really much of a ‘plan’.
Pete, I get it. Just want to be smart about how we move forward. I’d love to get one kid and her family here, but they are well in Texas.
Measure K isn’t the problem; the homes are in a valley.