So, now that surveys and research have determined that the American Dream is not dead and that millennials do want to be homeowners, which U.S. markets are most appealing to this large and influential group of buyers?
Seeking an answer to that question, realtor.com, the online real estate listing service operated by News Corp subsidiary Move Inc., used some of its own data to provide some perspective. The firm analyzed the 60 largest markets in the United States and compared the share of millennial page views on realtor.com in each area to the national average. Markets were ranked based on their comparison to the national average.
Some of the usual millennial “hot spots” made the top 10 list, such as Seattle and Los Angeles, but there were also a few surprises, such as Buffalo and Albany, N.Y.
“High job growth in markets such as Orlando, Seattle and Miami, and the power of affordability in places like Albany and Buffalo are making these markets magnets for millennials,” notes Javier Vivas, manager of economic research for realtor.com. “But what really stands out is that all these markets already have large numbers of millennials, which translates into strong populations of millennial homebuyers.”
Last year, a national housing survey conducted by Fannie Mae found that 91 percent of millennials said they plan to own a home “at some point.” Data from the website firsttimehomefinancing.com indicates that 33.2 percent of millennials believe they are three to five years away from buying a home. Another 24.4 percent estimate they are at least five years away.
Investors and market watchers should note that millennials have just scratched the surface of their potential homebuying prowess. Last year, homebuyers 36 years old and younger (millennials) accounted for 34 percent of purchases, according to the National Association of Realtors. The average age of a first-time homebuyer is 31; however, 90 percent of the millennial generation is less than 31 years old. In the coming years, as more millennials enter the workforce, pay off student loans, build up savings accounts, get married or settle down, and just mature in age, they will represent a growing wave of homebuyers.
Cities and metros that offer millennial-friendly characteristics and job markets, as well as markets that combine economic growth with relative affordability, can expect strong housing demand as this generation of approximately 90 million hits its peak homebuying years.
Larry Gray (l.gray@irei.com) is vice president and editorial director at Institutional Real Estate, Inc.