Back in November, I wrote a two-part reader case study on a relocation decision. In Should We Stay or Should We Go – A Reader’s Relocation Decision, I introduced you to Steve and Sheila. This millennial couple was struggling with the idea of leaving their hometown near Irvine, California to move to a new part of the country. They wanted to find a lower cost of living area that would meet their extremely important personal, financial and career goals. Steve and Sheila ended up moving to a suburban area in the Northwest.
A few weeks after those posts, I received an email from Miriam Bornstein, a Senior Marketing Content Coordinator at Zillow. She shared a great infographic with me that summarized some of the recent data Zillow had gathered about millennial housing trends. Check out the infographic, information and example Miriam provided to help us better understand the millennial buyer movement (in italics). Note: I have no affiliation with Zillow and this is not a sponsored post.
Millennials have all but taken over the real estate market. In fact, 42 percent of all home buyers are between the ages of 18 and 34. Not only are millennials driving the market, their preference for community-oriented properties draws many to purchase in larger condo complexes or buildings with communal conveniences, most often found in developing neighborhoods.
Not all of these developing neighborhoods are sprouting up in urban areas; in fact, millennial home-buying trends show that this younger demographic is moving to the suburbs, where it’s become easier to lead a social lifestyle outside of the big city. Despite common assumptions, only one-quarter of millennials buy in the urban core while half stray toward suburban zones. Eighty percent of adults under 25 live outside the heart of the city, and in the Northeastern U.S., 57 percent of millennial homeowners live in the suburbs.
If you live in the Northeast, or plan to move to this region, you might be wondering how home prices differ between the city of Boston and surrounding suburbs. To understand the millennial buyer movement within the Boston real estate market, take a look at the median home values across five nearby suburbs compared to the median home value in Boston ($517,800):
- Lexington – $900,200
- Belmont – $882,000
- Waltham – $507,600
- Stoneham – $474,700
- Westborough – $443,700
While the median home values in Lexington and Belmont are on the higher end of the spectrum, Waltham, Stoneham and Westborough are three Boston suburbs with prices lower than homes in the city. Furthermore, home sizes and amenities are more robust in the suburbs, enabling millennials to receive the best bang for their buck. Check out the Zillow Group Housing Trends Report, a comprehensive survey of 13,000 homeowners, sellers, buyers and renters, to see how millennial home buyers compare to the larger market.
Miriam shared some really interesting information and addressed some common assumptions about millennials too. One assumption I had was that millennial home buying was at a low point due to the student loan crisis and the tightening of mortgage requirements. I was somewhat surprised to read that 42% of home buyers are younger than 35.
And what about where millennials are choosing to live? Maybe I’ve just been doing too much reading the last few years about financial independence. If you work in the city, why not buy there if at all possible– limiting both time and money spent commuting? I think another assumption I’ve held is that many millennials want the excitement and opportunities available in urban areas. Are you surprised that so many millennials head to the suburbs?
But when I read posts by Sam at Financial Samurai, it doesn’t surprise me that many millennials in San Francisco would need to head to the suburbs to buy more reasonably priced houses. My work with Steve and Sheila was another example of millennials not being able to afford an urban area home (without sacrificing other important life goals.) The Zillow data on Boston real estate shows that there are suburbs near Boston that are more affordable than buying in the city too.
But I know this isn’t true everywhere. I live in a region where it is much more affordable to live in the urban area than in the most of the suburbs. Maybe this is just true in major (or more prosperous) urban/metropolitan areas?
What do you think? Does any of the data provided by Zillow surprise you? If you are a millennial – did you decide to move from an urban area to the suburbs? If so, what were some of the reasons – and was it cheaper? Did anyone choose to buy a home in an urban area? What drove your decision and was it more expensive to buy in the city than the suburbs?
P.S. Zillow Porchlight is a great blog that has posts about all different real estate topics – unique homes, home improvement, market trends, and even celebrity real estate. Check it out!