Over the past few years, homeownership rates for millennials have been slowly on the rise. According to the U.S. Census Bureau, the homeownership rate for Americans under 35 grew to roughly 37 percent in 2019. However, homeownership among today’s millennials is still below its peak of 43 percent in 2004 and woefully below the national rate of 65 percent across all major regions of the U.S.
There are several factors that contribute to the low rate. For example, many millennials are focused on paying off student loan debt and have not yet reached their peak earning potential. According to data from the U.S. Census Bureau, median annual earnings for millennial workers is about $40,000, and while many could potentially afford a mortgage payment, they don’t have the money to make a down payment. In addition, millennials are more likely than previous generations to delay major life events like marriage and children. However, as millennials grow more established in their careers and start families, the homeownership rate for this demographic will likely continue to move up.
That said, when factoring in housing affordability, cost of living, employment opportunities, and forecasted home value growth, some parts of the country are much friendlier to millennial home buyers than others. Overall, the best states for millennial home buyers are in the Midwest and South, especially Oklahoma, Ohio, Arkansas, Iowa, and Nebraska. These states tend to offer more reasonable home prices compared to income, low living costs, and below-average millennial unemployment rates.
The least favorable states for millennial buyers tend to be on the West Coast and in the Northeast, for example, California, Oregon, Massachusetts, and New Jersey. Notably, homeownership rates for millennials are almost ten percentage points higher in the Midwest than in the West.
At a more granular level, certain metros are known for having ideal economic conditions for millennial home buyers. To find which metros are most affordable for young home buyers, researchers at Construction Coverage analyzed data from Zillow and the U.S. Census Bureau’s 2018 American Community Survey. They created a composite score based on home affordability (median millennial earnings as a share of home prices), unemployment among millennials, projected home value growth, and cost of living.
Similar to the statewide trends, metros in the South and Midwest were found to be the most affordable for millennial home buyers. According to Zillow, the median home price nationwide is $245,193. For most of the best metros for millennial buyers, the median home price is under $200,000, well below the national median.
The Columbus, OH metro’s median home price of $210,615 and median full-time earnings for millennial workers of $42,000, along with several other factors, make it a more attractive location for millennial home buyers. Overall, the Columbus, OH metropolitan area ranks 13th best for millennial home buyers among large U.S. metros. Here is a summary of the date for the Columbus, OH metro:
- Overall score: 80.42
- Median home price: $210,615
- Median earnings for full-time millennial workers: $42,000
- Estimated monthly mortgage payment:: $844
- Forecasted 1-year change in home price: 5.1%
- Unemployment among millennials: 5.2%
- Cost of living (compared to national average): -7.7%
For reference, here are the statistics for the entire United States:
- Overall score: N/A
- Median home price: $245,193
- Median earnings for full-time millennial workers: $40,000
- Estimated monthly mortgage payment:: $982
- Forecasted 1-year change in home price: 4.1%
- Unemployment among millennials: 5.3%
- Cost of living (compared to national average): N/A
For more information, a detailed methodology, and complete results for all metros, you can find the original report on Construction Coverage’s website: https://constructioncoverage.com/research/best-cities-for-millennial-home-buyers-2020