Young people in the US are may not be approaching their finances with the approach that many experts recommend. CNBC Make it worked with Zillow and Redfin to identify the median home value for the top 10 places where millennials are moving as identified by RENTCafe. RentCafe is an apartment finding website that allows potential renters to submit applications and see listings in their area. While two of the Zip Codes have close to median value homes, the other eight suggest that millennials may be biting off more than they can chew. The full list of ten can be seen below. This sentiment is further reflected from a survey which suggested that less than 37% of millennials have $1,000 saved. To financial experts, these numbers are a growing concern.
Los Angeles, California: Downtown, 90014
Percent increase in millennials: 91.4%
Number of new millennials: 3,000
Median home value: $533,000
Los Angeles, California: Downtown, 90013
Percent increase in millennials: 60%
Number of new millennials: 4,700
Median home value: $567,000
New York, New York: Battery Park City, 10282
Percent increase in millennials: 54.5%
Number of new millennials: 2,300
Median home value: $825,000
Portland, Oregon: Kerns / Laurelhurst, 97232
Percent increase in millennials: 51.8%
Number of new millennials: 5,700
Median home value: $600,700
New York, New York: Lincoln Square, 10069
Percent increase in millennials: 47.7%
Number of new millennials: 2,200
Median home value: $1.9 million
Jacksonville, Florida: Riverside, 32204
Percent increase in millennials: 45.3%
Number of new millennials: 3,000
Median home value: $194,600
Los Angeles, California: Mid-Wilshire, 90048
Percent increase in millennials: 38.9%
Number of new millennials: 10,300
Median home value: $1.7 million
Philadelphia, Pennsylvania: Kensington, 19125
Percent increase in millennials: 37.4%
Number of new millennials: 11,200
Median home value: $265,000
San Francisco, California: Castro, 94114
Percent increase in millennials: 37.4%
Number of new millennials: 12,500
Median home value: $1.9 million
Washington, D.C.: Southwest Waterfront, 20024
Percent increase in millennials: 37.2%
Number of new millennials: 5,100
Median home value: $403,300
What perhaps is even more damming to the above results is that 50% of people born between 1980 and 1995 still rent. Meaning that many of the millennials living in these cities are not building equity with homes in these expensive areas, but rather paying the extravagant cost to rent and accenting that with the expensive lifestyle that is a staple of many of these cities.
Despite the low rate of ownership, a study by Apartment List in 2017 showed that more than 80% of millennials are interested in purchasing real estate. Yet, with many of millennials having less than $1,000 in savings, it will be ten years or more for most, especially in the more expensive cities, to be able to consider actually making that purchase.
Financial experts are a bit concerned for the future of this generation with financial habits like this. They recommend living within your means. They recommend for millennials and all age groups to make sure you are aware of the expenses with any given city and ensure you’re ready to transition from renting to buying if the time is right. Currently, Southern and Midwestern towns offer the best prices, so that may be where the transition is smoother.
