Where Millennials Can and Can’t Actually Afford to Buy Homes

With rising housing costs and crippling student loan debt, where can millennials actually afford to buy?

Los Angeles, CA – Nov. 14, 2017 (PRNewswire) Colorado and Oregon are two of the least affordable states for millennials to buy a home, a new study found.

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Unsurprisingly, these states also rank as two of the most popular to move to for the age group.

Personal finance website GOBankingRates considered the median list prices for homes across all 50 states. Based on the median millennial income of $60,932 and a 20 percent monthly savings rate, GOBankingRates calculated the amount of time it would take a millennial to afford a 20 percent down payment, as well as the estimated monthly mortgage payment.

Real Estate Infographic

For full study results and more details on methodology, visit: Where Millennials Can and Can’t Actually Afford to Buy Homes.

Best States for Millennials to Buy a Home

1. West Virginia

  • Median list price: $150,000
  • Estimated time to save for a down payment: 2.5 years
  • Monthly mortgage payment: $693

2. Ohio

  • Median list price: $154,900
  • Estimated time to save for a down payment: 2.5 years
  • Monthly mortgage payment: $704

3. Arkansas

  • Median list price: $164,900
  • Estimated time to save for a down payment: 2.7 years
  • Monthly mortgage payment: $757

4. Indiana

  • Median list price: $167,000
  • Estimated time to save for a down payment: 2.7 years
  • Monthly mortgage payment: $757

5. Iowa

  • Median list price: $169,000
  • Estimated time to save for a down payment: 2.8 years
  • Monthly mortgage payment: $766

Worst States for Millennials to Buy a Home

1. Hawaii

  • Median list price: $599,000
  • Estimated time to save for a down payment: 9.8 years
  • Monthly mortgage payment: $2,584

2. California

  • Median list price: $499,950
  • Estimated time to save for a down payment: 8.2 years
  • Monthly mortgage payment: $2,168

3. Massachusetts

  • Median list price: $419,900
  • Estimated time to save for a down payment: 6.9 years
  • Monthly mortgage payment: $1,833

4. Colorado

  • Median list price: $408,068
  • Estimated time to save for a down payment: 6.7 years
  • Monthly mortgage payment: $1,780

5. Oregon

  • Median list price: $352,000
  • Estimated time to save for a down payment: 5.8 years
  • Monthly mortgage payment: $1,551

Additional Study Insights

  • According to the U.S. Census Bureau, Texas, Washington and Colorado are the top three states where millennials are moving, though none top the list of places to buy.
  • The three cities losing the most millennials are New York, San Diego and Miami.
  • The Bay Area continues to be a hot spot for millennials, with San Francisco and Oakland both in the top 10 cities millennials are moving, despite the high cost of housing.

About GOBankingRates

GOBankingRates.com is a personal finance news and features website dedicated to helping visitors live a richer life. From tips on saving money, to investing for retirement or finding a good interest rate, GOBankingRates helps turn financial goals into milestones and money dreams into realities. Its content is regularly featured on top-tier media outlets, including MSN, MONEY, AOL Finance, CBS MoneyWatch, Business Insider and dozens of others. GOBankingRates specializes in connecting consumers with the financial institutions and products that best match their needs. Start your journey toward a rich mind and full wallet with us here.

Contact

Kim Dahlgren, Media Relations
GOBankingRates.com
kimd@consumertrack.com
(310) 297-9233 x138

HomeUnion Identifies the Best Housing and Rental Markets for Millennials

A St. Louis zip code is the top spot for young home buyers, while a Milwaukee zip code is best place for renters

Irvine, CA – May 2nd, 2017 (PRNewswire) HomeUnion, an online real estate investment management firm, has identified the best housing and rental markets for millennials. To rank the zip codes, HomeUnion analyzed a variety of factors including zip codes with the best public schools, shortest commute times and where millennials making the metro median income can afford a for-sale home or rental. For the best places to by a home, the monthly mortgage could not exceed 28 percent of median household income. For the best places to buy a single-family rental (SFR) home, rent could not exceed 2.5 times gross income.

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“Millennials recently eclipsed baby boomers as the nation’s largest generation, so it is imperative that they have quality long-term housing options,” explains Steve Hovland, director of research for HomeUnion. “We know that millennials would like to own a home, but we also know that they struggle to find suitable for-sale options near major employment centers due to high home prices and low inventory. Homes in metro areas like Los Angeles, San Francisco and New York City, where many millennials prefer to live, are out of reach for the most of the millennial generation because of the disparity between prices and incomes. They are also burdened with high levels of student loan debt, which makes homeownership an additional challenge,” he notes.

“To help millennials with their housing predicament, we created a comprehensive list of zip codes that are the most affordable with excellent public schools, and also have the shortest commute times to job centers,” Hovland says.

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Methodology for the study: The study includes one zip code per market that met the criteria of affordability and schools in the 80th percentile. Subsequently, the list is sorted by shortest average commute, rather than most affordable zip code. To determine loan qualification, a mortgage-to-gross income ratio of 28 percent was utilized in the analysis. Income was based on the median household income in the metro for those aged 25- to 34-years old. In some cases, the same zip code was deemed to be a great place to rent and buy. Average rents are for single-family homes. A rent-to-income ratio of 2.5 times was used to determine eligibility. Markets not included in the study, including those in the Bay Area, did not include a single zip code that met the study’s criteria.

About HomeUnion
HomeUnion is an online real estate investment management firm. Based in Irvine, Calif., it provides all the services needed for individuals to invest remotely in rental properties. The company uses a combination of research and proprietary analytics to incorporate data on over 110 million homes and 200,000 neighborhoods into their database, and then delivers its solutions to an on-the-ground infrastructure that currently serves 11 locations. HomeUnion’s role spans the lifecycle of the investment transaction: identifying sound investments, handling all aspects of acquisition, maximizing income, protecting asset value, and selling the asset when the time comes.

Millennial Home Buyers Far More Traditional Than Previously Believed

Online lenders and agents making little headway among Millennials, according to CentSai survey

New York, NY – April 18, 2017 (PRNewswire) When it comes to home buying, millennials are much more traditional than previously believed, according to a recent survey of 2,050 Americans aged 18 to 34 conducted by CentSai, the financial wellness community.

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Three-quarters (75%) of respondents said that they would use a local real estate agent instead of an online agent, reports CentSai. Almost three-quarters (71%) said they would choose a local lender.

This is in stark contrast to recent data showing approximately 69% of all home buyers would apply for a mortgage online.*

Online mortgage lending and brokerage services are expected to transform home buying, but millennials surveyed by CentSai said that – contrary to popular belief – they prefer local providers due to existing relationships and local knowledge.

“We were surprised to learn that online providers are not yet as big a disruptor in this sector as we first thought, despite purported cost savings,” said Doria Lavagnino, CentSai co-founder and president. “We found that millennials place a high value on the personal touch and knowledge of a local agent. Buying a home for the first time is daunting, and working with a local agent – particularly an agent referred by a parent or friend – could provide peace of mind.”

Likewise, the survey reveals that online real estate agents seem less popular with millennials than expected, despite advertising cheaper overall service via mobile apps. That said, the vast majority (91%) of millennials surveyed said they would use an online site or mobile app to research neighborhoods and home prices and to identify houses that they might buy.

Millennials and Real Estate Infographic

The survey respondents cited various reasons for going local, including personal touch and handholding, longstanding relationships, local knowledge, and amount of hassle.

More than half (56%) of the millennials surveyed by CentSai plan to purchase a house in the next two years. Of the 44% who said that they did not plan to buy a house in the next two years, more than two-thirds (68%) said that they are not buying because they cannot afford to do so. Only 12% said they preferred the freedom of renting, and 10% cited student loan debt as a reason not to buy in the next two years.

CentSai also released a special in-depth real estate section featuring everything millennials need to know about home buying, from mortgages and homeowners insurance to DIY home repair.

About CentSai, Inc.

Centsai’s mission is to make learning personal finance skills approachable and fun for young Americans through every stage of life. CentSai provides financial wellness education through its two platforms: CentSai, which serves millennials (those born between 1980 and 2000), and CentSai Adulting, which is for teens. Both platforms spread invaluable personal finance information through storytelling in blogs and videos, as well as expert commentary, Q&As, podcasts, and more.

About the Survey

This survey was conducted using randomized participants between ages 18 and 34 who live in the United States. No particular state or region was targeted over others. The survey was formulated to ask participants if they would use an online lender or agent over a local one, and what amount of commission they would be comfortable paying. Based on the answer to the question, “Do you plan on purchasing a house in the near future (0-2) years?” we filtered the participants to other questions.

*Fannie Mae’s 2015 National Housing Survey found that 70 percent of recent homebuyers would like to obtain a mortgage quote online, and that 69 percent would like to complete a mortgage application online.

Media Contact:

Kelly Bailey
(347) 556-5985
155161@email4pr.com

Realtor.com® Names Top Cities for Millennials

Salt Lake City, Miami and Orlando rank No. 1, No. 2, and No. 3

Santa Clara, CA March 22, 2017 (PRNewswire) Realtor.com®, a leading online real estate destination operated by News Corp [NASDAQ: NWS, NWSA]; [ASX: NWS, NWSLV] subsidiary Move, Inc., today announced realtor.com®’s Top Cities for Millennials. Led by Salt Lake City, the list includes some of the usual millennial hot spots – Seattle and Los Angeles – along with a few surprises such as Buffalo, N.Y. and Albany, N.Y.

In rank order, realtor.com®’s Top Cities for Millennials include: Salt Lake City, Miami, Orlando, Fla., Seattle, Houston, Los Angeles, Buffalo, Albany, San Francisco, and San Jose, Calif.

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“High job growth in markets such as Orlando, Seattle, and Miami, and the power of affordability in places like Albany and Buffalo are making these markets magnets for millennials.” said Javier Vivas, manager of economic research for realtor.com®. “But what really stands out is that all these markets already have large numbers of millennials, which translates into strong populations of millennial home buyers.”

The average share of the 25-34 year old population in the U.S. is 13 percent, but in these top markets, the average share is 14 percent. Salt Lake City, No. 1 on the list, happens to also have the highest share of milllennials, comprising 15.8 percent of its total population. Seattle is close behind with a millennial population at 15.2 percent, Los Angeles and San Francisco tie for third with 15.0 percent.

Economic growth and relative affordability make these markets really attractive to first-time home buyers. Salt Lake City has the lowest unemployment rate of all the markets on the list at 2.9 percent, which is well below the national unemployment rate of 4.7 percent. The job market is also a factor in San Francisco and San Jose, with the unemployment rate at 3.7 percent. When it comes to affordability, Buffalo is No. 1 with the most affordable home prices relative to salary, at 22.7 percent. It’s followed by Albany where people only use 27.3 percent of their income on a home and Salt Lake City where buyers use 30 percent.

Realtor.com® analyzed the 60 largest markets in the U.S. and compared the share of millennial page views in each area to the national average. Markets were ranked based on their comparison to the national average. Page view data included in this analysis covers the period from August 2016 to February 2017.

Realtor.com®’s Top Cities for Millennials

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1. Salt Lake City

The draw: The excitement of an urban city with the relaxed vibes of a mountain town. Large tech companies such as Adobe are attracting the millennial generation to this area by offering innovative workspaces, large salaries and an overall high quality of life.

Millennial hotspot: Sugar House, located southeast of downtown Salt Lake City, offers hip bars and trendy restaurants.

The stats: Millennials make up 15.8 percent of the population. Homeowners spend 30 percent of their income on their home and the unemployment rate is 2.9 percent

2. Miami

The draw: An international mecca for tourism and entrepreneurship.

Millennial hotspots: Wynwood, located just north of downtown, offers a strong art community. South Beach is a strong draw for business and fashion oriented millennials looking to make it big in their careers.

The stats: The millennial population makes up 13.1 percent of the population. Affordability is tough, requiring the average buyer to spend 49 percent of their income on a home. Its unemployment rate is 5.1 percent, slightly above the national average.

3. Orlando

The draw: Downtown Orlando is becoming a hot area and offers easy access to public transportation, shopping and dining, as well as a proximity to many jobs.

Millennial hotspots: Thornton Park, located just east of downtown has also become popular among millennials who are looking to live in a unique historic neighborhood with cobbled streets and lined with bungalows.

The stats: Millennials account for 14.6 percent of the total population in Orlando. Homes are affordable here and only require 34 percent of income. The unemployment rate is below the national average at 4.4 percent.

4. Seattle

The draw: With big company names such as Starbucks, Amazon, Filson, K2 and REI, it’s not hard to imagine why so many millennials want to live and work in Seattle.

Millennial hotspots: Capitol Hill and Belltown are popular neighborhoods for creative millennials who want access to boutique shopping, craft breweries and unique dining experiences.

The stats: Seattle has the second largest millennial population, at 15.2 percent, of all the towns on the list. It offers affordability of 35.6 percent and an unemployment rate of 4.2 percent.

5. Houston

The draw: A booming job market is drawing many young millennials looking to jump-start their careers.

Millennial hotspots: The Heights, Oak Forest, and Timbergrove attract millennials with their close proximity to downtown, boutique shops, trendy restaurants and craft breweries.

The stats: Houston’s population is made up of 14.5 percent millennials. While people spend 36.1 percent of their income on homes, the unemployment rate in Houston is slightly higher than the national average at 5.4 percent.

6. Los Angeles

The draw: Companies such as Snap Inc. and Airbnb draw tech driven millennials to what is now being referred to as “Silicon Beach,” while actors, comedians and music artists are still drawn to the area for a chance at fame.

Millennial hotspots: Silver Lake is a hotbed for millennials looking for a young and creative community.

The stats: Millennials make up 15.0 percent of the population. While the unemployment rate is in line with the national average at 4.7 percent, affordability is difficult in Los Angeles with people spending 64.1 percent of their income on a home.

7. Buffalo

The draw: Money is flowing into the area as a tech scene begins to expand from incubation competitions such as 43 North, which awards $5 million in prizes yearly.

Millennial hotspots: With a revitalized waterfront, downtown Buffalo and North Buffalo are becoming hot real estate for trendy millennials who are looking for easy access to shopping and dining as well as a family oriented community.

The stats: For those millennials looking to spend more time outdoors, Buffalo has a millennial population of 13.4 and an unemployment rate of 5.6 percent. It is the most affordable market on the list, where people only spend 22.7 percent of their salary on their home.

8. Albany

The draw: Albany is slowly becoming what is referred to as the “Silicon Valley of the East Coast,” with companies such as GE putting up headquarters and employing over 7,000 people. The large tech scene popping up is attracting many young millennials who want to be in tech, but don’t want to pay for real Silicon Valley housing prices.

Millennial hotspot: Specialty cocktail bars, Biergartens, and craft coffee houses make downtown Albany the place to be for millennials.

The stats: Millennials make up 12.7 percent of Albany’s population. It offers both affordable housing at 27.3 percent of income and a low unemployment rate at 4.5 percent.

9. San Francisco

The draw: San Francisco’s tech fueled job market is pumping millennials into the area left and right, however, sky-high housing prices are pushing many of the newcomers to the outer neighborhoods and forcing them to rent.

Millennial hotspots: North Beach and the Mission have become popular for the young tech generation that have established themselves and earned a large paycheck, while the Sunset District and Daly City offer more affordable housing options – relative to the rest of the city.

The stats: In San Francisco, millennials make up 15 percent of the total population. While the unemployment rate is really low at 3.7 percent, affordability is a concern with people spending 56.2 percent of their income on a home.

10. San Jose

The draw: Opportunity to work in some of the most innovative companies in the U.S. as well as the infamous Silicon Valley paycheck, are major drivers drawing millennials to the area.

Millennial hotspots: Centrally located downtown San Jose is attracting many millennials because of its public transportation as well as trendy shops and unique dining experiences.

The stats: Millennials make up 14.2 percent of the total population in San Jose. Similar to San Francisco, the unemployment rate is low at 3.7 percent but homes cost 53 percent of income.

About realtor.com®

Realtor.com® is the trusted resource for home buyers, sellers and dreamers, offering the most comprehensive source of for-sale properties, among competing national sites, and the information, tools and professional expertise to help people move confidently through every step of their home journey. It pioneered the world of digital real estate 20 years ago, and today helps make all things home simple, efficient and enjoyable. Realtor.com® is operated by News Corp [NASDAQ: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc. under a perpetual license from the National Association of REALTORS®. For more information, visit realtor.com®.

Media Contact:

Realtor.com®
Lexie Puckett Holbert
lexie.puckett@move.com

NAR Survey Finds Gen X on the Mend; More Children Living with Millennials and Boomers

Washington, D.C. – March 7, 2017 (nar.realtor) An improving economy, multiple years of strong job growth and the notable increase in home values in most markets fueled a greater share of purchases from Generation X households over the past year.

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This is according to the National Association of Realtors® 2017 Home Buyer and Seller Generational Trends study, which evaluates the generational differences(1) of recent home buyers and sellers. The survey additionally found that a growing number of millennials and younger boomer buyers have children living at home; student debt is common among Gen X and boomer households; more millennials are buying outside the city; and younger generations are more likely to use a real estate agent.

Much of the spotlight in recent years has focused on the several challenges millennials are enduring on their journey to homeownership. According to Lawrence Yun, NAR chief economist, lost in this discussion are the numerous Generation X households who bought their first home, started a family and entered the middle part of their careers only to be rattled by job losses, falling home values and overall economic uncertainty during and after the Great Recession.

This year’s survey reveals that debt and little or no equity in their home slowed many Gen X households from buying sooner. Recent Gen X buyers delayed buying longer than millennials because of debt, were the most likely generation to have previously sold a distressed property and were the generation most likely to want to sell earlier but couldn’t because their home was worth less than their mortgage. Furthermore, Gen X buyers indicated they had the most student loan debt ($30,000).

Generational Real Estate Infographic

“Gen X sellers’ median tenure in their previous home was 10 years, which puts many of them selling a property they bought right around the time home values were on the precipice of declining,” said Yun. “Fortunately, the much stronger job market and 41 percent cumulative rise in home prices since 2011 have helped a growing number build enough equity to finally sell and trade up to a larger home. More Gen X sellers are expected this year and are definitely needed to ease the inventory shortages in much of the country.”

The uptick in purchases from Gen X buyers this year (28 percent) was the highest since 2014 and up from 26 percent in 2016. Millennials were the largest group of recent buyers for the fourth consecutive year (34 percent), but their overall share was down slightly from a year ago (35 percent). Baby boomers were 30 percent of buyers, and the Silent Generation made up 8 percent.

Younger boomers increasingly consider adult children when buying

This year’s survey also brought to light how the soaring cost of rent in many areas is likely influencing the decision of middle-aged parents to buy a home with their young adult children in mind. Younger boomers were the most likely to purchase a multi-generational home (20 percent; 16 percent in 2016), and the top reason for doing so was that children over 18 years old either moved back home or never left (30 percent; 27 percent in 2016).

“The job market is very healthy for young adults with a college education, but repaying student debt and dealing with ever-increasing rents on an entry-level salary are forcing many to either shack-up with several roommates or move back home,” said Yun. “This growing trend of delayed household formation is one of the main contributors to the nation’s low homeownership rate.”

Student debt is not just a millennial problem

Debt, particularly from student loans, appears to be a portion of the household budget of buyers in every generation. While millennials were the most likely to have student debt (46 percent), their typical balance ($25,000) was lower than Gen X buyers ($30,000). A combined 16 percent of younger and older boomer buyers also had student debt, with a median balance of over $10,000 for each group.

Among the share of buyers who said saving for a down payment was the most difficult task, millennials were most likely to cite student loans as the debt that delayed saving (55 percent), followed by Gen X (29 percent) and younger boomers (9 percent).

“Repaying student debt also appears to be slowing some current homeowners who went to graduate school and now can no longer afford to sell and trade up because of their loans,” added Yun. “Nearly a third of homeowners in a NAR survey released last year said student debt is preventing them from selling a home to buy a new one.”

More millennials moving to the suburbs…with their kids

Similar to previous years, roughly two-thirds of millennial buyers are married. One aspect of their household that has changed is the number of children in them. In this year’s survey, 49 percent of millennial buyers had at least one child, which is up from 45 percent last year and 43 percent two years ago.

With more kids in tow, the need for more space at an affordable price is increasingly pushing millennial buyers outside the city. Only 15 percent of millennial buyers bought in an urban area, which is down from 17 percent last year and 21 percent two years ago.

“Millennial buyers, at 85 percent, were the most likely generation to view their home purchase as a good financial investment,” added Yun. “These strong feelings bode well for even greater demand in the future as more millennials settle down and begin raising families. A significant boost in new and existing inventory will go a long way to ensuring the opportunity is there for more of them to reach the market.”

Millennial buyers and sellers overwhelmingly go online and use a real estate agent

Regardless of age, buyers and sellers continue to see real estate agents as an integral part of a real estate transaction. In this year’s survey, nearly 90 percent of respondents said they worked with a real estate agent to buy or sell a home. This kept for-sale-by-owner transactions down at their lowest share ever (8 percent).

Not surprisingly, online and digital technology usage during the home search has increased in recent years. Although millennials and Gen X buyers were the most likely to go online during their search, they were also the most likely to buy their home using a real estate agent (92 percent and 88 percent, respectively). On the seller side, millennials were the most likely to use an agent (90 percent), followed closely by Gen X and younger boomer sellers (each at 89 percent).

“Online and mobile technology is increasingly giving consumers a glut of real estate data at their disposal,” said NAR President William E. Brown, a Realtor® from Alamo, California. “However, at the end of the day, buyers and sellers of all ages — but especially younger and often DIY-minded consumers — seek and value a Realtors®’ ability to dissect this information and use their expertise and market insights to coach buyers and sellers through the complexities of a real estate transaction.”

NAR mailed a 132-question survey in July 2016 using a random sample weighted to be representative of sales on a geographic basis to 93,171 recent homebuyers. Respondents had the option to fill out the survey via hard copy or online; the online survey was available in English and Spanish. A total of 5,465 responses were received from primary residence buyers. After accounting for undeliverable questionnaires, the survey had an adjusted response rate of 5.9 percent. The sample at the 95 percent confidence level has a confidence interval of plus-or-minus 1.32 percent.

The recent homebuyers had to have purchased a home between July of 2015 and June of 2016. All information is characteristic of the 12-month period ending in June 2016 with the exception of income data, which are for 2015.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.2 million members involved in all aspects of the residential and commercial real estate industries.

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1. Survey generational breakdowns: younger millennials (ages 26 and under); older millennials (ages 27-36); Generation X (ages 37-51); younger boomers (ages 52-61); older boomers (ages 62-70); and the Silent Generation (ages 71-91).

Media Contact:

Adam DeSanctis
(202) 383-1178
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