Despite the housing market remaining unaffordable to millions in America, millennials are seizing a major component of the homebuying market in several cities.
According to a new LendingTree report, millennials made up nearly half of the mortgage purchase inquiries from the 50 largest U.S. metros. But certain cities saw even higher shares of potential homebuyers from millennials.
Why It Matters
While a tight housing supply and high mortgage rates have kept many out of the housing market, millennials have still shown a strong desire to own their own home.
A survey from Realtor.com conducted earlier this year reported that the millennial generation was the only generation with an increased likelihood of purchasing a home in the next six months.
What To Know
In 2024, 49.7 percent of mortgage inquiries were from potential millennial borrowers.
Specifically, San Jose, Seattle and San Francisco all had the largest shares of potential millennial homebuyers, at 62.6 percent, 57.1 percent and 56.9 percent of mortgage inquiries, respectively.
These cities also had the highest average down payments among potential millennial homebuyers, with San Jose leading at $212,901.
“Cities on the West Coast are seeing increased demand from millennials because that is where the job growth is at this point. Although Florida has its share of buyers in the millennial age range, the subsequent salaries are truly not conducive to help offset the inflationary pressures in those regions,” Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek.
“Yes, the cost of living may be lower in Florida or other southern states, but the job market is not where the growth resides, especially as you see our economy being predominantly tech-driven, and the current administration doubling down on technology.”
Conversely, millennials in Louisville, Tampa and Jacksonville made up the smallest share at just 41.5 percent, 41.7 percent and 42.4 percent.
“Tech hubs dominate the list,” LendingTree’s chief consumer finance analyst Matt Schulz told Newsweek. “These are also some of the highest-income places in the nation. It isn’t exactly breaking news that a higher income makes it far easier to buy a home, but our report makes it clear that is the case even some of the nation’s most expensive cities.”
Across the board, the median age of first-time buyers is 38, according to the National Association of Realtors 2024 Profile of Home Buyers and Sellers.
What People Are Saying
Schulz told Newsweek: “It makes sense that millennials would make up the bulk of today’s home shoppers. Gen Z hasn’t fully gotten into the housing market yet, while many Gen Xers and baby boomers are more likely to be sitting on the sidelines, unwilling to trade their current low-rate mortgage for one at today’s higher rates.”
Thompson told Newsweek: “Job growth and growth is the number one cause, especially in regions such as California and Seattle. Technology remains the industry leader, as you can see with Austin having larger inquiries within the state of Texas. Housing prices have continued to move higher with higher rates and are basically unaffordable for millennials, especially given the starting salaries of the kinds of work their degrees demand. The very work they are flocking towards is the same work that is seeking to put them out of a job.”
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: “There should be no surprises here. While home prices still hover at near all-time highs, the reality is some millennials are finally at a point in their careers where they can actually start to consider a home purchase due to higher incomes and increased buying power. It’s also something the housing market desperately needs. With many markets seeing falling demand and the average age of home buyers going higher, there is a general concern for how future generations will embrace home buying going forward and whether they will simply give up on the dream after being priced out.”
What Happens Next
Thompson said middle America will likely get older and weaker as more young people flock to the coast courtesy of these real estate trends.
“Mid-American cities will lose out to states like California and New York for talent as growth will continue to fade,” Thompson said. “You can already see it in the farming industry across the country as the industry is in need of another bailout.”
Schulz said millennials are likely to continue dominating the housing market in the years to come.
“Gen Z is just getting started, Gen X and boomers may be sitting things out, fearful of trading away their current low-rate mortgages, and millennials are in growth mode,” Schulz said.
“They’re adding to their families and looking for more space. They’re climbing the ladder in their careers and earning enough to buy their first home or upgrade to a better one. They’re eager to build wealth for the future. Add it all up, and you get millennials continuing to dominate the housing market, at least for a while longer.”