The 5 Hottest Housing Markets for Millennial Home Buyers
by Kimberly Rotter | Published on June 27, 2021
Affordability and lifestyle may be the primary factors driving millennial home buyers in 2021.
Millennials are now in their prime home-buying years, driving housing demand in many parts of the country. We asked Emanuel Santa-Donato, VP, Capital Markets and Lead Acquisition at Better.com to tell us more about the housing markets millennials love.
Where millennials are buying homes
Here are the top five hottest housing markets for millennial home buyers, as measured by purchase loan application volume in the first quarter of 2021, according to Santa-Donato:
In Seattle, millennials are finding plenty of indoor and outdoor activities, a healthy job market, good public transportation, and beautiful tree-filled neighborhoods. The trade-off for Seattle's lush greenery and giant trees is rainfall on a little less than half of Seattle's days each year. Temperatures in this coffee paradise are mild year-round, mostly ranging from the 40s to the 70s. One potential downside: At the time of this writing, the median home price was more than twice the national median, according to data from Redfin.
Atlanta is bigger than you might have thought. The city itself has a population of fewer than half a million people, but the Atlanta metro area is home to 6 million. Here you'll find a diverse population and many pleasant neighborhoods. A strong startup culture and many Fortune 500 companies mean millennials can find steady job growth and plenty of professional opportunities. With a median home price currently just a little higher than the national median, Atlanta is one of the more affordable cities on our list.
If you like warm weather, Austin, Texas, may be for you. Freezing temperatures are rare. What people love about Austin is the live music. Some say you can find live music every night of the week, and that's not counting the world-famous music festivals Austin hosts. Tech employers and startups are big here, too. When we checked, Austin's median home price was about 50% higher than the national median.
Houston is another Texas oasis for warm weather lovers. The average high temperatures are just a smidge lower than Austin's. That means there are few days each year that are too cold to enjoy outdoor activities. One of the best things about Houston is the lower cost of living compared to cities of similar size. When we checked, the median home price was about 15% below the median home price nationwide. Many buyers with a modest or lower income can afford to buy a home in Houston.
Santa-Donato says that Houston ranked No. 1 in the country for Generation Z and Generation X home buyers in 2021, but that millennials are flocking in greater numbers to the No. 1 city on our list: Chicago.
Chicago. Because pizza.
There are lots of other reasons to enjoy Chicago. It's a bustling and beautiful urban center with excellent public transportation and plenty of walkable neighborhoods. Here you'll find world-class everything -- museums, businesses, conventions, schools, and more. You'll definitely get to experience all four seasons, so bring your parka. In many ways, Chicago's cultural and community events put it on par with New York City. But you can move here for much less. At the time of this writing, the median home price was about the same as the median home price nationwide.
What millennial home buyers want
When you look at the hottest home-buying markets for millennials, you'll find that many of them share certain characteristics. Here are some of the things millennials want when they shop for a home.
Healthy local economy
Millennials are setting down roots in vibrant neighborhoods. A sense of community is a high priority, more so than the number of square feet. Millennials value community work spaces and a shorter commute (if they have to leave home for work at all). A 2021 National Association of REALTORS report said that commute costs were one of the top priorities for millennial buyers. That same report shows that more than half of millennials are buying in the suburbs.
You may know a few newly minted millennial millionaires who invested early and smart, but even more millennials are earlier in their careers and can't compete with buyers in a seven-figure housing market. Affordability is critical. Santa-Donato says that the purchase mix is "shifting to suburban areas as customers are capitalizing on low interest rates to settle outside of metro areas for more space, lower cost of living, and higher quality of life."
A cul-de-sac home in a good school district has always been desirable, but that may be even more true for growing families coming out of the pandemic. We all want to get out there and do things, so opportunities to enjoy life near home are more important than ever. Those shopping for homes are keen on bike paths, outdoor dining, coffee shops, local music, and playgrounds.
Millennials -- and Gen Z -- are today's primary home buyers
Millennials make up a bigger share of home buyers every year. Santa-Donato says that more than half of Better’s purchase applications per month between January and March 2021 were from millennial buyers. That number jives with a CoreLogic report that says that millennials made up more than half of all buyers in 2020.
Gen Z customers (aged 25 and below) are right on millennials' heels, Santa-Donato told us. These customers are "taking advantage of historically low interest rates and purchasing homes across the country," says Santa-Donato. "The number of Gen Z applications at Better increased 57% from January to March, and was up 124% year over year from March 2020."
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