Rising mortgage rates and skyrocketing home prices aren’t stopping millennials from becoming homeowners—but they do have a big impact on where they’re buying.
The metros with the highest share of millennial home buyers—and wannabe home buyers—were far from the hottest and priciest coastal cities. Instead, millennials made up a larger percentage of buyers in the more affordable Rust Belt and the Midwest, with the top metro being … Des Moines, IA, according to a recent LendingTree report.
Take that New York City, San Francisco, and Seattle!
The mortgage marketplace looked at the metros with the highest share of millennial mortgage requests and offers from Feb. 1, 2017, through Feb. 1, 2018. Millennials are defined as aged 35 and younger. LendingTree looked only at the 100 largest metros for its report.
“They’re more affordable, they haven’t had the huge price increases [like] you’ve seen on the coasts,” says Tendayi Kapfidze, LendingTree’s chief economist, on the top millennial destinations for mortgage-seekers.
For example, the median list price in Des Moines’ city limits was just $135,000. That was less than half of the national median of $274,900 as of Feb. 1, according to the most recent realtor.com® data available. However, the median price was higher in the Des Moines metro region, at $291,265.
“It’s turned really trendy. There’s a lot of cool lofts being built, upscale condos,” says local real estate broker Bryan Curtis of Attain RE. Nearly two-thirds of his buyers are millennials. Just this month he sold a $112,000 starter home to a 19-year-old buyer.
“There’s a lot of new businesses opening up,” Curtis says. “Tech start-ups are really huge here, which is bringing in a lot of millennial crowds.”
Many of his younger clients are coming from outside the state, including places such as Texas, California, and Florida. They’re drawn by the cheaper home prices and lower taxes.
Des Moines was followed by other reasonably priced cities, including Pittsburgh; Buffalo, NY; Lansing, MI; Fort Wayne, IN; Grand Rapids, MI; Scranton, PA; Syracuse, NY; Youngstown, OH; and Minneapolis.
“The biggest obstacle people face when trying to buy a house is a down payment,” Kapfidze says. “In these cities where home prices are lower, it means the down payment is lower. It’s easier for millennials to save to get into a house in those cities.”
Meanwhile, the metros with the fewest millennial buyers tended to be retirement hot spots. Five of the top 10 were in Florida.
They were Sarasota, FL; Fort Myers, FL; Honolulu; Palm Bay, FL; Las Vegas; Lakeland, FL; Tucson, AZ; Reno, NV; Tampa, Fl; and Albuquerque, NM.
“The cities where there are the fewest millennial buyers are really retirement-heavy,” Kapfidze says. “People are retiring from these colder places, [and] they’re selling their houses to millennials.”