A recent report from the National Association of Realtors reveals that Millennial homeownership migration is primarily motivated by market affordability and strong job prospects.
The report analyzed the employment gains, population trends, income levels and housing conditions of 100 of the largest metropolitan statistical areas in the nation.
NAR’s analysis discovered that the most popular Millennial cities tend to have a high share of both present Millennial residents and recent movers, as well as favorable employment opportunities.
According to the report, Madison, Wisconsin, is one of the top destinations for Millennial homeowners. In this housing market, 75% of the city’s recent movers have been Millennials, and data indicates they are likely to remain in the area.
NAR Chief Economist Lawrence Yun said Madison has many attributes that appeal to Millennials, including earning potential.
In fact, as of 2017, the median income for Madison’s Millennials sat at $62,000, and $68,500 for those who had recently moved to the city, according to Yun.
“In comparison to other areas, Madison offers one of the highest wages for Millennials,” Yun said. “Moreover, this income level combined with the robust employment opportunities and the affordability, make Madison among one of the most appealing locations for Millennials who are looking to stay longer and raise families.”
Madison isn’t alone in this, as NAR’s report also determined that California continues to be a popular home buying destination for Millennials, specially the city of Bakersfield. In this affordable metro, 67% of its recent movers have been Millennials, boosting its Millennial population to 28%.
Yun said like Bakersfield, the West Coast needs to build more affordable homes. Not only will this entice young buyers, but it will also drive more housing traffic.
According to NAR’s data, nearly 15% of the homes listed for sale in Bakersfield are affordable to the city’s Millennials, whereas only 4% of homes listed in neighboring Los Angeles are affordable.
And if affordability isn’t a good incentive, Yun said it’s the strong job market.
“The increasing employment rate in California is another strong selling point among this generation,” Yun said. “While the rate of unemployment in Bakersfield is higher than it is nationwide, we’re seeing job growth there pick up at a strong pace. Home building in Bakersfield is rising, too. Many newcomers to San Francisco and Los Angeles do not stay for long because of unaffordability. Millennials moving to Bakersfield meanwhile are looking to take advantage of conditions toward homeownership.”
Notably, NAR’s report also revealed that the West Coast isn’t the only Millennial hotspot, as Oklahoma City was named an attractive Millennial destination.
According to NAR’s data, 29% of the city’s residents are Millennials, while 61% of those who recently relocated to the area are also Millennials. Additionally, during the time of NAR’s survey, Millennials were positioned to afford 30% of the properties listed in the area.
“An overwhelming majority of younger and older Millennial homebuyers responded that their strong desire to own a home was the primary reason that they purchased their home,” Yun said. “As long as supply keeps up to meet demand and prevents costs from rising too high and too rapidly, these identified metro areas are likely to see an uptick in purchases from Millennial homebuyers – including Oklahoma City.”
The image below highlights the top five housing markets for Millennial homeowners: