Over the past few years, homeownership rates for millennials have been slowly on the rise. According to the U.S. Census Bureau, the homeownership rate for Americans under 35 grew to roughly 37 percent in 2019. However, homeownership among today’s millennials is still below its peak of 43 percent in 2004 and woefully below the national rate of 65 percent across all major regions of the U.S.
There are several factors that contribute to the low rate. For example, many millennials are focused on paying off student loan debt and have not yet reached their peak earning potential. According to data from the U.S. Census Bureau, median annual earnings for millennial workers is about $40,000, and while many could potentially afford a mortgage payment, they don’t have the money to make a down payment. In addition, millennials are more likely than previous generations to delay major life events like marriage and children. However, as millennials grow more established in their careers and start families, the homeownership rate for this demographic will likely continue to move up.
That said, when factoring in housing affordability, cost of living, employment opportunities, and forecasted home value growth, some parts of the country are much friendlier to millennial home buyers than others. Overall, the best states for millennial home buyers are in the Midwest and South, especially Oklahoma, Ohio, Arkansas, Iowa, and Nebraska. These states tend to offer more reasonable home prices compared to income, low living costs, and below-average millennial unemployment rates.
The least favorable states for millennial buyers tend to be on the West Coast and in the Northeast, for example, California, Oregon, Massachusetts, and New Jersey. Notably, homeownership rates for millennials are almost ten percentage points higher in the Midwest than in the West.
At a more granular level, certain cities are known for having ideal economic conditions for millennial home buyers. To find which cities are most affordable for young home buyers, researchers at Construction Coverage analyzed data from Zillow and the U.S. Census Bureau’s 2018 American Community Survey. They created a composite score based on home affordability (median millennial earnings as a share of home prices), unemployment among millennials, projected home value growth, and cost of living. Metros were grouped by population into the following categories:
- Large metros: 1,000,000 or more
- Midsize metros: 350,000-999,999
- Small metros: less than 350,000
Similar to the statewide trends, cities in the South and Midwest were found to be the most affordable for millennial home buyers. According to Zillow, the median home price nationwide is $245,193. For most of the best cities for millennial buyers, the median home price is under $200,000, well below the national median.
Here are the best cities for millennial home buyers.
Best Large Cities for Millennial Home Buyers
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15. Kansas City, MO-KS
- Overall score: 78.39
- Median home price: $203,873
- Median earnings for full-time millennial workers: $40,000
- Estimated monthly mortgage payment: $817
- Forecasted 1-year change in home price: 3.8%
- Unemployment among millennials: 3.9%
- Cost of living (compared to national average): -6.9%
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14. Detroit-Warren-Dearborn, MI
- Overall score: 78.80
- Median home price: $179,078
- Median earnings for full-time millennial workers: $40,000
- Estimated monthly mortgage payment: $717
- Forecasted 1-year change in home price: 4.1%
- Unemployment among millennials: 6.4%
- Cost of living (compared to national average): -4.2%
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13. Columbus, OH
- Overall score: 80.42
- Median home price: $210,615
- Median earnings for full-time millennial workers: $42,000
- Estimated monthly mortgage payment: $844
- Forecasted 1-year change in home price: 5.1%
- Unemployment among millennials: 5.2%
- Cost of living (compared to national average): -7.7%
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12. Milwaukee-Waukesha-West Allis, WI
- Overall score: 80.51
- Median home price: $216,600
- Median earnings for full-time millennial workers: $44,000
- Estimated monthly mortgage payment: $868
- Forecasted 1-year change in home price: 4.7%
- Unemployment among millennials: 4.1%
- Cost of living (compared to national average): -4.5%
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11. Memphis, TN-MS-AR
- Overall score: 81.09
- Median home price: $153,866
- Median earnings for full-time millennial workers: $35,000
- Estimated monthly mortgage payment: $616
- Forecasted 1-year change in home price: 4.7%
- Unemployment among millennials: 9.4%
- Cost of living (compared to national average): -8.9%
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10. Indianapolis-Carmel-Anderson, IN
- Overall score: 82.15
- Median home price: $179,994
- Median earnings for full-time millennial workers: $40,000
- Estimated monthly mortgage payment: $721
- Forecasted 1-year change in home price: 4.2%
- Unemployment among millennials: 5.3%
- Cost of living (compared to national average): -8.0%
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9. St. Louis, MO-IL
- Overall score: 82.18
- Median home price: $179,019
- Median earnings for full-time millennial workers: $40,000
- Estimated monthly mortgage payment: $717
- Forecasted 1-year change in home price: 3.7%
- Unemployment among millennials: 4.8%
- Cost of living (compared to national average): -8.6%
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8. Rochester, NY
- Overall score: 82.53
- Median home price: $156,242
- Median earnings for full-time millennial workers: $40,000
- Estimated monthly mortgage payment: $626
- Forecasted 1-year change in home price: 3.7%
- Unemployment among millennials: 5.2%
- Cost of living (compared to national average): -1.8%
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7. Louisville/Jefferson County, KY-IN
- Overall score: 82.53
- Median home price: $180,331
- Median earnings for full-time millennial workers: $38,000
- Estimated monthly mortgage payment: $722
- Forecasted 1-year change in home price: 4.8%
- Unemployment among millennials: 5.0%
- Cost of living (compared to national average): -9.1%
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6. Buffalo-Cheektowaga-Niagara Falls, NY
- Overall score: 82.97
- Median home price: $173,282
- Median earnings for full-time millennial workers: $40,000
- Estimated monthly mortgage payment: $694
- Forecasted 1-year change in home price: 4.5%
- Unemployment among millennials: 5.2%
- Cost of living (compared to national average): -5.1%
Photo Credit: Alamy Stock Photo
5. Cincinnati, OH-KY-IN
- Overall score: 84.42
- Median home price: $185,009
- Median earnings for full-time millennial workers: $40,000
- Estimated monthly mortgage payment: $741
- Forecasted 1-year change in home price: 4.3%
- Unemployment among millennials: 3.9%
- Cost of living (compared to national average): -10.0%
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4. Cleveland-Elyria, OH
- Overall score: 86.23
- Median home price: $158,559
- Median earnings for full-time millennial workers: $40,000
- Estimated monthly mortgage payment: $635
- Forecasted 1-year change in home price: 4.5%
- Unemployment among millennials: 6.3%
- Cost of living (compared to national average): -9.8%
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3. Oklahoma City, OK
- Overall score: 86.32
- Median home price: $156,350
- Median earnings for full-time millennial workers: $35,100
- Estimated monthly mortgage payment: $626
- Forecasted 1-year change in home price: 4.5%
- Unemployment among millennials: 3.7%
- Cost of living (compared to national average): -8.6%
Photo Credit: Alamy Stock Photo
2. Birmingham-Hoover, AL
- Overall score: 87.09
- Median home price: $156,186
- Median earnings for full-time millennial workers: $40,000
- Estimated monthly mortgage payment: $626
- Forecasted 1-year change in home price: 4.9%
- Unemployment among millennials: 7.4%
- Cost of living (compared to national average): -11.2%
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1. Pittsburgh, PA
- Overall score: 87.17
- Median home price: $157,983
- Median earnings for full-time millennial workers: $42,000
- Estimated monthly mortgage payment: $633
- Forecasted 1-year change in home price: 4.0%
- Unemployment among millennials: 4.7%
- Cost of living (compared to national average): -6.0%
Methodology & Full Results
To find the best cities for millennial home buyers, Construction Coverage created a composite score for each metropolitan area and state based on the following factors:
- Home affordability (median millennial earnings as a share of home prices): 60%
- Unemployment among millennials: 15%
- Cost of living: 15%
- Projected home value growth: 10%
The current and projected home price data used in the analysis are from the Zillow Home Price Index. The estimated monthly mortgage payment is based on the Zillow Home Price Index and assumes a 30-year fixed mortgage, 20 percent down payment, and 4.4 percent interest rate.
Median earnings for full-time millennials and the unemployment rate among millennials were calculated using the U.S. Census Bureau’s 2018 American Community Survey 1-Year Public Use Microdata Sample. For this calculation, full-time workers are defined as those working 35 hours or more each week for at least 50 weeks that year. Millennials are those individuals between 22 and 37 years old in 2018.
Only metropolitan areas with at least 100,000 residents and data from Zillow were included. Additionally, metros were grouped into cohorts based on population size: large metros (1,000,000 residents or more), midsize metros (350,000-999,999 residents), and small metros (less than 350,000 residents).
* This article was originally published here
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