Where are Millennials Buying Homes?

Millennials, the generation born between about 1981 and 2001, now represent the largest segment of the U.S. population. Although they have numbers on their side, there is a persistent notion that millennials are uninterested in home ownership and therefore don't contribute significantly to the housing market. Indeed, some spectators have even gone so far as to label them a "generation of renters". However, according to realtor.com's Erik Gunther, this idea is unsupported by the facts. In reality, older millennials were the largest group of homebuyers in 2014! Keep reading to learn about the millennial housing situation and the top 10 areas attracting millennial buyers.

People in the older half of the millennial generation are now between 25 and 34 years old and make up 13.5% of the U.S. population. Historically, this age range has produced the largest share of home buyers, as those who are younger generally have yet to establish their lives and those who are older are likely to have already bought a home. So, since millennials are a "renter generation", does this age range currently show little interest in home ownership? The answer is a resounding "NO!". In fact, this age range was 70% more likely to buy a home in 2014 than the national average. The National Association of Realtors found that, in the same year, older millennials were responsible for 28% of all home purchases. Furthermore, 65% of older millennials spent time on a real estate website or app in August of this year.

While these numbers prove that many young people are both interested in and going through with home ownership, the raw numbers are about 500,000 below what would be expected for those 25-34. Why have some young homebuyers abstained from pulling the trigger? Having come of age during the Great Recession, this generation faced several challenges to achieving financial stability which have delayed their decision to buy a home. Luckily, many of these challenges are on their way to resolution: Unemployment among millennials is now below the national average, household formation rates are rising, rent increases have consistently outpaced home price growth, and borrowing rates remain historically low!

Jonathon Smoke, chief economist at realtor.com, summarizes the millennial situation thusly: “People who believe that millennials are disinterested in homeownership are grossly mistaken. This generation hit the job market during one of the largest recessions of all time, and they’ve had to work hard to establish credit and save for a down payment. With the older segment just beginning to enjoy living the life that drives homeownership—including marriage and children—now is the most appropriate time for them to consider homeownership. And that’s exactly what the latest numbers are showing.”

With that, here are the ten housing markets with the highest proportion of millennial mortgage borrowers in the country (ranging from 44% to 59%):

1. Des Moines, Iowa

2. Provo, Utah

3. Baton Rouge, La.

4. Pittsburgh, Pa.

5. Lafayette, La.

6. Grand Rapids, Mich.

7. Madison, Wis.

8. Clarksville, Tenn.

9. New Orleans, La.

10. Shreveport, La.

As the economy continues to improve, rates of millennial home ownership should only increase. After all, those 25-34 are only the older half of the generation! The younger half represents another decade of growing home ownership waiting to happen!

Sources: Top 10 Markets for Millennials Seeking a Home, Older Millennials Are the Rock Stars of Real Estate

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