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If you look at the latest data, Millennial homebuyers aren’t flocking to the big cities or urban centers like most would assume. They’re heading to the outliers—smaller, more suburban towns where a slightly longer commute means more affordable housing, safer streets and a lower cost of living.
In fact, according to the Ellie Mae Millennial Tracker, the top cities among Millennial buyers last month were Indiana, Pennsylvania (about an hour from Pittsburgh); Bay City, Michigan (not far from Flint); and Watertown, South Dakota (a short drive from Sioux Falls).
Porch.com found that Millennials are moving increasingly toward “18-hour” cities—places that aren’t 24-7 like New York or Los Angeles, but still offer nightlife, job opportunities and plenty of big-city amenities. Some of these include Greensboro, North Carolina; Saint Paul, Minnesota; Milwaukee; Detroit; and Aurora, Colorado. All five have an average new resident age of 24 or younger.
Heading Out of State
These buyers aren’t just going against the grain city-wise. According to a Porch.com study, Millennials are also making some surprising out of state moves. North Dakota, for example, has the youngest median age of new residents in the last year at just 23. Colorado and Iowa’s new residents average just 25 years old. Kentucky and Nebraska also rank among the youngest.
According to Erica Harvill, vice president of corporate communications at Ellie Mae, these moves come down to a few things: inventory, pricing and timing.
“We show a large number of Millennials purchasing homes across the South and Midwest where there tends to be more inventory and due to lower prices, they can stretch their money a little further,” Harvill said. “We also see Millennials purchasing in suburban areas outside of major metropolitan areas, perhaps so they can afford a larger house since we do know that the bulk of the Millennials are in their early thirties which would align with marriage and family formation events.”
When looking at the data, it certainly seems Millennials have been rewarded for their outside-the-box moves. The average loan amount for Millennials in June was just $191,000—well below the national median home price of $217K.
The HQ2 Effect
So what do these trends spell for HQ2-related growth? According to Simon Chen, CEO of ERA Real Estate, if Amazon’s second headquarters lands in Austin, Texas, we can expect big growth in nearby Dripping Springs.
“While real estate prices in Austin proper have soared alongside the city’s growing role as a tech hub, it’s location on the outskirts of Texas’ sprawling hill country region means it’s surrounded by charming small towns, rolling green hills and crystal blue swimming holes,” Chen said. “This picturesque town is home to the Deep Eddy Vodka Distillery, numerous vineyards and Hamilton Pool, a stunning natural swimming hole and grotto.”
If Denver wins HQ2, Chen has his sights on Golden for Millennial growth—a 25-minute commute West from the city.
“This quaint, Gold Rush town boasts world-class outdoor recreation—from fly fishing to hiking—and more, shall we say, relaxing options like Coors Brewery, the largest single-site brewery and tasting room in the world,” Chen said.
In the event HQ2 lands in Atlanta, nearby Carrollton might see Millennial-spurred growth. The city has an average home price of just $139,000. It might be 45 minutes away, but Chen calls it “a refuge for young city dwellers.”
“With prices high and competition fierce, Millennials are willing to compromise and commute a little bit further for the quality of life they’re looking for: the high priority items being proximity to friends, family, and important hobbies and passions,” he said.