WASHINGTON, June 2, 2016 /PRNewswire/ -- A flurry of financial obstacles and lifestyle choices are stalling the journey to homeownership for many young adults, but becoming a homeowner is currently more feasible in some less expensive metro areas with steady job growth and lower qualifying incomes needed to buy, according to new research by the National Association of Realtors®.
NAR analyzed employment gains, population trends, income levels and housing conditions in the largest 100 metropolitan statistical areas1 across the country to identify the best purchase markets for millennial2 homebuyers.
Lawrence Yun, NAR chief economist, says although millennials have made up the largest share of buyers for three consecutive years3, sales to first-time buyers and the homeownership rate for young adults under the age of 35 remain depressed at levels not seen in decades4. This is despite historically low mortgage rates, escalating rental costs and low unemployment levels among those with a college education.
"Even with potentially higher incomes, prospective millennial homebuyers residing in some of the most expensive cities in the country face the onerous task of paying steep rents while trying to save for an adequate down payment," he said. "However, for those currently living in or looking to move to a more affordable part of the country, there are metro areas right now with solid job growth and that offer a smoother path to homeownership."
The top 10 metro areas NAR identified were chosen for their above-average share of current millennial residents and recent movers, favorable employment opportunities and relatively low qualifying incomes needed to purchase a home5.
NAR's study found that the best purchase markets for millennials buyers currently are (listed alphabetically):
- Austin, Texas
- Charleston, South Carolina
- Minneapolis, Minnesota
- Ogden, Utah
- Portland, Oregon
- Raleigh, North Carolina
- Salt Lake City
- Washington, D.C.
Other markets NAR identified for having promising potential for millennial homebuyers include:
- Des Moines, Iowa
- Jacksonville, Florida
- Nashville, Tennessee
According to Yun, during the early stages of the economic recovery some of the largest metro areas – such as New York and parts of California – were attractive to millennials for their strong job markets, but their higher costs of living made it difficult to buy. Now that many more affordable, middle-tier cities have mostly recovered from the downturn and are once again experiencing robust job growth, millennials moving to some of these cities will likely realize they're earning enough to purchase their first home.
"An overwhelming majority of young renters recently said they eventually want to buy a home5," adds Yun. "As long as new and existing-home supply keeps up to meet demand and holds prices from rising too quickly, these identified areas are poised to lead the way in helping millennials realize their American Dream of becoming a homeowner."
The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.
1Areas are generally metropolitan statistical areas as defined by the U.S. Office of Management and Budget. NAR adheres to the OMB definitions, although in some areas an exact match is not possible from the available data. A list of counties included in MSA definitions is available at: http://www.census.gov/population/estimates/metro-city/List4.txt.
2Millennials in this study, as categorized in the U.S. Census Bureau's American Community Survey, are those born between 1982 and 2000.
3According to NAR's 2016 Home Buyer and Seller Generational Trends survey, for the third straight year, the largest group of recent buyers were millennials, who composed 35 percent of all buyers (32 percent in 2014).
4According to the U.S. Census Bureau, the homeownership rate for households headed by adults under the age of 35 fell to 34 percent in the first quarter of 2016, the lowest since at least 1994. NAR's 2015 Profile of Home Buyers and Sellers found that the share of first-time buyers declined to 32 percent, which is the second-lowest share since the survey's inception (1981) and the lowest since 1987 (30 percent).
5Data comes from NAR's First-time Homebuyer Affordability Index. The qualifying income assumes a 10 percent down payment.
Information about NAR is available at www.realtor.org. This and other news releases are posted in the "News, Blogs and Videos" tab on the website. Statistical data in this release, as well as other tables and surveys, are posted in the "Research and Statistics" tab.
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SOURCE National Association of Realtors