IRVINE, CA—With all the talk about why Millennials aren’t buying homes, RealtyTrac took it one step further and asked, “Where in the US can Millennials afford to buy and rent, and where can they not afford it?” The answer, not surprisingly, was not in the West, but in the Southeast and Midwest.
RealtyTrac’s list of the 15 most-affordable counties in which to buy or rent nationwide contained eight Southeast counties, three Northeast/Mid-Atlantic counties and four Midwest counties. Its list of the 15 least-affordable counties in which to buy or rent contained seven Western counties, five Northeast counties, two Mid-Atlantic counties and one Southeast county.
The firm looked at counties with a population of 100,000 or more, where Millennials (defined as those born between 1977 and 1992) are at least 24% of the total population (compared to 22% of the population nationwide. RealtyTrac excluded counties that experienced a decrease in the total number of Millennials from 2007 to 2013.
Daren Blomquist, VP of RealtyTrac, tells GlobeSt.com, “The West Coast and Northeast markets are established Millennial meccas that have long since overshot home prices that are affordable for median income earners, thanks to the strong demand from Millennials along with demand from other buyers. Meanwhile, less-established Millennial hot spots in the Midwest and Southeast are not as far along in the home-price trajectory and so are much more affordable. Many of these emerging Millennial-friendly markets are in places where the housing market has been hollowed out by population loss over the past few decades, resulting in an ample supply of inexpensive housing prime for reinvention by a younger generation. Others simply just have much more room to grow and build and don’t have the land supply constraints many of the coastal markets have—helping to keep prices more affordable.”
Among the findings, multiple counties in New York, Los Angeles and San Francisco topped the least-affordable lists to buy and rent. Surprisingly, counties in the DC metro area made the list of most-affordable places to buy and rent: Arlington County made the list for the most affordable counties to rent, and Prince George’s County made the list of most-affordable counties to buy a home.
Counties in the Seattle, Portland and Charlotte metro areas rounded out the list of the least-affordable places to buy. Counties in the Orlando and Jacksonville, FL; and Flagstaff, AZ, metro areas finished the list with the least affordable places to rent.
GlobeSt.com was unable to reach RealtyTrac’s VP Daren Blomquist before deadline to discuss what factors make the Southeast and Midwest so affordable and the West and Northeast, in particular, so unaffordable.
As GlobeSt.com reported last month, contrary to popular belief, Millennials do want to own homes—they just can’t get into the buyer’s market, according to Rick Sharga, EVP atAuction.com. Sharga told us, “I don’t agree with the theory that a lot of people are espousing right now that Millennials don’t want to be homeowners. Research suggests that they do want to be homeowners, but aren’t in a hurry to do it. They’re facing financing prevention from being able to do so. We’re looking at a delay that, if it continues much longer, might lead to this age group ultimately having abnormally low levels of homeownership in the long run. There are stricter lending regulations with regard to student-loan debt—there’s a hard cap on what your debt-to-income ratio can be in order to get a mortgage. This group is having a much rougher time recovering from the recession than almost any other group. They’re above the national average in terms of unemployment rates and low-paying jobs, which factors against them entering the market. It bodes very well for the multifamily market in the near term, for the next few years at least. It also suggests an investment opportunity for people who want to buy single-family units and convert them into rentals. The shift in this area has been from institutional investors to smaller investors.”