Boomers, Millennials Have Similar Housing Preferences, Uneven Resources

Two reports–one primarily about Baby Boomers, the other primarily about Millennials–suggest they share many common goals in where they prefer to live, but have a marked disparity in resources.

RentCafe.com (https://www.rentcafe.com/blog/apartmentliving/lifestyle-apartmentliving/baby-boomer-zip-codes/) analyzed Census Bureau data in 250 U.S. cities, finding Baby boomers certainly don’t fit the mold when it comes to housing preferences. “While a big part of them continue to be homeowners, an impressive number of this cohort is joining younger generations on the renting bandwagon and showing a growing interest in big city life,” the report said. Most of the top 20 zip codes with highest boomer populations are in New York City.

A separate study, by Clever Real Estate (https://listwithclever.com/real-estate-blog/top-cities-for-millennial-home-buyers/), found an overwhelming majority of the best cities for millennial home buyers are in the South and Midwest, home to 15 of the top 20 cities on its list. With less buying power than boomers, nonetheless Millennials also show an urban preference. “Top cities in these regions offer home affordability that can’t be matched in the Northeast and West, while having above-average job markets and thriving housing markets,” said Clever Head of Research Tommy Shaughnessy.

The RentCafe report said a Las Vegas zip occupies the first place in Top 20 zip codes with the highest increase in baby boomers, along with other zip codes in the Southwest and the West. A number of zip codes in popular retirement cities in warm states such as Florida and Arizona dominate the list of Top 20 zips codes with the largest share of baby boomers, while New York dominates the top 20 zips with the largest boomer population (1.4 million), claiming 14 zip codes in the top 20.

“[New York City] fairly good job catering to the needs of its older residents with various senior discounts (from transportation to entertainment), social programs and cultural activities,” the report said.

Texas also has several zip codes with a considerable senior population. El Paso’s 79936 made the 10th spot with a total boomer population of 15,784, followed by Houston’s 77084 with 14,806 and Grand Prairie’s 75052 with 14,100. The report said “retirement states” such as Texas and Arizona remain popular among Millennials’ parents

RentCafe compared boomer versus millennial zip codes, noting most popular zip codes for millennials are found in big cities such as San Francisco, New York, Washington, D.C. and Chicago. “Given the wide pool of job opportunities and entertainment options, these zip codes do more than just meet the needs of young millennials,” it said.

Meanwhile, Clever Real Estate said as millennials gain more buying power, homeownership is becoming a top priority, with 84% of millennials believe owning a home is part of the “American Dream.”

“Millennial home buyers are becoming the driving force in the residential real estate market, accounting for over 36% of all home buyers in the U.S.,” Shaughnessy said. “However, certain areas of the country have become inflated with rising costs of living and sky-high real estate prices. For millennials in competitive housing markets, such as Seattle–where median home prices sit around $537,800–homeownership can seem impossible. A $107,560, 20% down payment is out of the realm of possibility for the average debt-strapped millennial.”

Clever developed a Millennial Metric to help identify cities that strike the perfect balance between fun and affordability for young home buyers with limited means and high expectations. It looked at the 100 most populated cities in the U.S. and ranked them against four key metrics: job opportunity, home affordability, livability and housing market forecast. Based on these metrics, it found an overwhelming majority of the best cities for millennial home buyers are in the South and Midwest–15 of the top 20 cities on the list, led by Rochester, N.Y.; Des Moines, Iowa; and Omaha, Neb.

“Top cities in these regions offer home affordability that can’t be matched in the Northeast and West, while having above-average job markets and thriving housing markets,” the report said. “Areas of upstate New York like Rochester also scored well due to superb affordability, high livability indexes and strong housing markets.”

The report noted most millennials can’t afford homes on the West Coast and East Coast. “Cities like San Jose, San Francisco, and Seattle score high on the job index, but sky-high home prices and slowing housing markets make these cities unaffordable –and questionable-investments,” Shaughnessy said. “West Coast city livability scores were also dragged down due to poor air quality, long commutes and above-average crime rates.”

Shaughnessy said East Coast cities such as Boston and New York face similar problems, with inflated home values that are beginning to slow after recovering from the 2008 housing crash. “East Coast cities rank high on livability and job indexes, making them great options for millennial renters with in-demand skills who can pay rent, but sub-par options for millennial home buyers,” he said. “Coastal cities in general are significantly more expensive than inland cities. The average home on a coastal city will cost $397,264 compared to $230,794 for a city inland, meaning millennials can save around $166,000 by purchasing a home away from the coast.”

Rochester homes averaged $146,000, Des Moines homes clocked in at $188,000, and Omaha home prices settled at $177,000, well below the $266,800 median home value.

These are all well below $226,800, the median home value in the United States. The report also noted job markets are also strong in all three cities; all boast unemployment rates below the 3.8% national average and strong wage growth over the past decade.

The study said the worst city for millennial home buyers is Los Angeles, and advised Millennial would-be home buyers to “steer clear” of most West Coast cities.

“Los Angeles performs poorly on three important core metrics: home affordability, livability and the housing market forecast,” the report said, noting the median home costs $649,500 in Los Angeles, which would require a $129,900 down payment. “With the average student debt hovering around $33,000, combined with the high cost of living on West Coast cities, millennials won’t be buying homes in this area anytime soon.”

Shaughnessy said while large coastal cities such as San Francisco and New York offer strong job markets and lively streets for millennials to explore, affordability concerns make them poor choices for those looking to put at least 20% down on a home. “While lower down payment options exist, millennials will find much higher monthly premiums, PMI and other expenses that can make homeownership tough,” he said. “In contrast, inland cities like Des Moines, Indianapolis, Kansas City and Columbus, Ohio offer affordable housing opportunities, strong job markets and plenty of culture and entertainment to keep millennials happy.”