Markets that Fit the Millennial Buyer
Millennials are gaining home buying market share each year. The largest living generation is aging into prime homeownership years and will drive the housing market going forward. Parker Associates researched the data out there and sifted through the cohort’s preferences to identify the ten most desirable markets, you must follow the rules in business.
SETTING THE STAGE
The actual definition of a Millennial varies by source. Parker Associates is prone to defining the Millennial as a person born between 1980 and 2000. Obviously, there are some variations in these, but that is a good general definition. Right now, the largest share of Millennials is just around 30 years old, contributing to the demographic wave that is still in the early stages. For example, the latest data from the U.S. Census Bureau shows:
- The homeownership rate for those under 35 was 36.5% in 4Q18, up from the previous year, but far below the 39.1% historical average.
- The homeownership rate for those 35-44 (including both Millennials and some Generation X) ticked up to 61.1% in the fourth quarter of last year but again is off by a high margin compared to the 64.9% historical average.
With the depressed but increasing homeownership rate in the ages the Millennials are currently living in, Millennials are critical to understand. To help provide answers, Parker Associates looked at data from Meyers and their most recent annual Millennial survey. The national survey’s focus is on the everyday Millennial regardless of their living situation (own, rent, live with parents, dorm, etc).
CHECKING THE BOXES
There is a question on the annual survey that was new. Namely: “Have you seriously considered moving out of your current city? If yes, to where and why?” This resulted in a reasonably surprising response in that nearly 60% of the respondents said “Yes.” Of those respondents:
- The younger Millennials are more flexible. 70% of Millennials aged 19-24 have seriously considered moving compared to 45% of those 35 to 39.
- Owning a home is a deterrent. 60% of renters are open to moving compared to 40% for existing homeowners. For reference, Millennials make up a large share of closed loan applications in Baltimore, Houston, Chicago, Minneapolis, and Nashville, according to Ellie Mae.
- Expensive markets rank high. Denver, Portland, Seattle, Washington, DC, and NYC were the top five desired locations. Those considering Denver, Portland, and Seattle were already located in the West. The desire to move to Washington, DC and NYC came from outside the Northeast.
Regardless of the city of origin, the driving factors to move included job opportunities (30% of respondents), affordability (20%), and lifestyle (12%). Using this information, the research revealed an index to capture the markets most poised for Millennial success.
- Texas dominates top spots. Dallas and Houston ranked extremely well for quality of life, cost of living, and overall employment opportunities, propelling the markets to #1 and #2, respectively. Austin, a far smaller metro, rounds out the top three, with a heavier focus on relative housing affordability and the fun factor.
- Phoenix lands at #4. The labor market helped and hurt Phoenix with strong employment opportunities but modest salaries. The lower than average Millennial wages are partially offset by a favorable cost of living. The fun factor pulled Phoenix lower than Austin.
- Two factors drive Orlando to #5. Employment opportunities in Orlando, while concentrated in a few sectors, are plentiful with 4.0% job growth year over year. Like Phoenix, Orlando’s score was dinged by very low Millennial salaries, but the cost of living helps mitigate some of the effects. For example, 85% of total new housing units planned had a minimum price below the local FHA loan limit of $314,827, according to Zonda.
- Lower than you’d think. While highly recognized as a Millennial hotbed, Denver’s desirability was pushed down by affordability factors but remains attractive from a quality of life standpoint and lands at #6 on the list.
- Rounding out the top 10 on the list, in order, are Washington D.C., Raleigh, Seattle and Nashville.
The index data overlaps with three of the top five desired markets highlighted by Millennials in the survey (Denver, Washington, DC, and Seattle). While affordability is certainly a factor in considering where to live, job opportunities, or at least perceived job opportunities, play a higher role.
Parker Associates works extensively on understanding your market, your consumer, and your goals. We don’t take guesses; we take the time and commit the resources to researching the market and the consumer to make sure we get it right. We are YOUR advocate by being the CONSUMER’S advocate.
Spend time looking at what you are trying to acquire, develop, or sell to learn how you can improve the success of what you are offering. Parker Associates helps understand the consumer by answering WHO will buy, WHAT they will buy, and HOW they will buy it. When the research is completed and the analysis is done, having the answers to these questions will reveal what will provide the best success for your project. Keep asking WHO, WHAT, and HOW and keep developing to fit the need.
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The REMA Team is an alliance of professionals in the real estate industry focused on research, data, and how it can be used in marketing and sales with our expertise in understanding and interpreting the data we gather for our clients. We focus on ensuring that visualizations are clear and accurate, giving decision-makers confidence in their choices. Data is data, but visualizing the data is what makes the difference. Explore both the spatial and non-spatial data in several different formats to understand it fully such as mapping, charting, and tabular. Interpretive data follows in qualitative, quantitative, and temporal data formats. Understand what will suit your situation best. We’d enjoy the opportunity to connect with you. Contact us directly to discuss your personal situation.
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David WB Parker is a principal of Parker Associates of Jacksonville, Florida, marketing consultants to the real estate industry; President of PTC Computer Solutions, IT Specialist, and an active real estate sales professional with Barclay’s Real Estate Group based in Jacksonville, FL. He can be reached at 904-607-8763 or via email email@example.com.