Millennial demand is driving up prices in neighborhoods with kids, and the trend is growing

A record number of Americans will reach the peak age for first-time home buyers this year, adding to an already competitive market for homes in family-friendly neighborhoods

- Home values in ZIP codes with a higher share of kids younger than 18 are growing faster than homes elsewhere. This is due to demand from millennials looking for homes that meet the needs of their growing families.

- More millennials will reach the age of 32, the peak age for first-time home buyers, over the next two years than ever before.

News provided by

Zillow

Feb 03, 2022, 08:00 ET

SEATTLE, Feb. 3, 2022 /PRNewswire/ -- Home values are growing fastest in areas with the highest share of kids, reflecting the impact millennial house hunters are making on family-friendly neighborhoods with a shortage of homes for sale. A record number of millennials will reach key age milestones for home buyersⁱ over the next two years, which may accelerate price gains even further.

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The top 10% of ZIP codes with the largest share of kids in each county analyzed saw an average of 21.3% growth from October 2020 to October 2021, compared to 17.6% in ZIP codes with the smallest share of kids. That trend started in 2013, which, not coincidentally, was the year the oldest millennials turned 32, the age when many new parents buy their first homes. That's the median age of first-time home buyers and one year older than the median age of fathers with newborns.ⁱⁱ

"As millennials go, so goes the housing market, and we are seeing now, as millennials age, that they are looking for homes that fit the needs of growing families," said Zillow economist Nicole Bachaud. "Millennial demand has helped push up home prices in areas with the most children. Competition for homes in these family-friendly areas should intensify in the coming years as more millennials reach the key age of 32, adding to the affordability squeeze."

Zillow analyzed 421 U.S. counties,ⁱⁱⁱ representing 71% of the country's population. ZIP codes with more residents under 18 years old^iv are associated with higher home value growth in nearly two-thirds of the counties studied. Many of the counties where this relationship does not hold true are vacation destinations, where part-time residents have unconventional housing demands. Home value growth in these family-friendly areas began to outpace nearby ZIP codes in 2013, and the correlation between kids and home value growth has been nearly perfect for each year since 2017.

That first wave of early-30s millennials had the benefit of discounted home prices as a result of the Great Recession; home values in these family-friendly ZIP codes were hit particularly hard between 2008 and 2011, in the midst of the nationwide housing crash. Today's first-time home buyers are encountering a much different market, especially as home price growth has reached record highs during the pandemic.

The snowball of millennials reaching peak age for first-time home buyers has grown during the past nine years, and is about to turn into an avalanche. Nearly 200,000 more Americans will turn 32 this year than did so in 2021 ― the biggest jump since the transition from Generation X to millennials in 2013 — and even more will do so in 2023. This demographic reality should fuel even faster price growth in family-friendly ZIP codes over the next two years, making saving for a down payment even more challenging for first-time buyers.

This effect is strongest in counties that encompass the cities of Norfolk, Virginia; Washington, D.C.; Portland, Oregon; Austin, Texas; and Seattle. Counties where this trend does not hold true include those encompassing Galveston, Texas; Santa Barbara, California; and Ocean City, New Jersey.

Metro Area*	ZIP Code with Highest % of Kids			ZIP Code With Lowest % of Kids
Metro Area*	ZIP Code	% of Kids	Year-over-Year Home Value Growth (Dec. 2021)	ZIP Code	% of Kids	Year-over-Year Home Value Growth (Dec. 2021)
New York, NY	08701	48.3%	28.2%	07756	2.2%	20.3%
Los Angeles, CA	92694	37.0%	25.2%	92637	0.2%	10.9%
Chicago, IL	60585	34.1%	16.9%	60606	3.6%	-0.8%
Dallas, TX	75253	36.5%	22.7%	75207	1.7%	16.0%
Philadelphia, PA	08104	32.6%	35.9%	19102	3.3%	-1.5%
Houston, TX	77032	40.6%	14.9%	77002	1.1%	4.2%
Washington, D.C.	22060	41.1%	7.8%	20037	2.1%	0.1%
Miami, FL	33327	33.8%	22.7%	33480	4.9%	30.4%
Atlanta, GA	30021	33.3%	26.5%	30303	1.0%	8.6%
Boston, MA	02052	29.9%	15.3%	02215	2.4%	0.6%
San Francisco, CA	94621	31.4%	15.6%	94704	3.2%	10.9%
Detroit, MI	48210	35.4%	-0.1%	48226	3.2%	7.7%
Riverside, CA	92301	34.4%	29.6%	92210	5.1%	30.1%
Phoenix, AZ	85297	36.4%	34.3%	85351	0.4%	29.5%
Seattle, WA	98439	34.4%	25.2%	98101	2.9%	3.6%
Minneapolis, MN	55411	35.7%	7.1%	55401	3.5%	0.3%
San Diego, CA	91906	33.0%	22.7%	92101	4.8%	15.0%
St. Louis, MO	63106	34.7%	19.3%	63102	2.6%	5.7%
Tampa, FL	33547	34.8%	30.2%	33573	6.1%	31.7%
Baltimore, MD	20755	32.4%	8.0%	21202	11.0%	11.2%
Denver, CO	80238	35.0%	17.5%	80202	2.2%	8.3%
Pittsburgh, PA	15110	30.1%	15.6%	15213	3.2%	11.6%
Portland, OR	97140	29.3%	20.3%	97209	3.5%	0.5%
Charlotte, NC	28088	30.4%	25.5%	28202	7.9%	13.0%
Sacramento, CA	95742	30.4%	23.2%	95814	6.5%	4.3%
San Antonio, TX	78242	32.2%	15.4%	78215	4.8%	13.5%
Orlando, FL	34773	35.7%	27.7%	32801	8.2%	16.0%
Cincinnati, OH	45232	47.4%	25.2%	45219	6.1%	14.8%
Cleveland, OH	44104	32.2%	20.5%	44114	4.5%	15.8%
Kansas City, MO	64126	36.7%	35.3%	64105	3.0%	8.5%
Las Vegas, NV	89086	37.0%	26.2%	89029	7.6%	24.8%
Columbus, OH	43211	32.2%	37.1%	43215	1.9%	6.0%
Indianapolis, IN	46235	32.4%	21.4%	46204	2.5%	7.4%
San Jose, CA	95020	27.8%	19.9%	95113	2.3%	-0.3%
Austin, TX	78724	34.1%	50.2%	78701	1.8%	23.4%
Virginia Beach, VA	23523	35.3%	17.7%	23517	8.4%	12.1%
Nashville, TN	37086	31.5%	27.8%	37201	3.8%	15.2%
Providence, RI	02907	28.4%	17.5%	02903	5.3%	12.3%
Milwaukee, WI	53218	34.4%	19.1%	53202	2.4%	7.1%
Jacksonville, FL	32081	29.3%	35.0%	32202	7.3%	22.7%
Memphis, TN	38126	35.6%	24.2%	38103	6.5%	13.1%
Oklahoma City, OK	73119	37.8%	21.5%	73102	2.6%	11.0%
Louisville, KY	40210	31.8%	20.3%	40202	6.1%	2.4%
Hartford, CT	06120	34.2%	15.2%	06103	3.9%	10.9%
Richmond, VA	23120	32.7%	15.8%	23230	13.0%	15.3%
New Orleans, LA	70447	32.6%	14.4%	70116	11.5%	1.7%
Buffalo, NY	14212	29.4%	28.6%	14222	8.6%	12.4%
Raleigh, NC	27571	37.2%	32.0%	27605	8.7%	20.9%
Birmingham, AL	35091	30.8%	13.6%	35233	2.3%	12.0%
Salt Lake City, UT	84096	41.6%	29.9%	84102	6.3%	21.1%

*Table ordered by market size

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ⁱ Consumer Finance Protection Bureau: https://files.consumerfinance.gov/f/documents/cfpb_market-snapshot-first-time-homebuyers_report.pdf
ⁱⁱ Human Reproduction, Volume 32, Issue 10, October 2017, Pages 2110–2116: https://academic.oup.com/humrep/article/32/10/2110/4096427.
ⁱⁱⁱ Every U.S. county with at least 10 ZIP codes containing 1,000 households or more was included in the study. This threshold was imposed to ensure a sufficient sample of homes and ZIP codes in each county.
^iv Estimates of each ZIP code's share of population under 18 years old come from the U.S. Census Bureau's 2019 American Community Survey five-year estimates.

SOURCE Zillow