Millennials are far from the leading new-home buyer demographic in big markets, but some smaller markets are showing strength in attracting young buyers. Although underemployment and affordability have largely kept those ages 18 to 34 from hitting the housing market since the 2008 crash, the 2013 Current Population Survey and market intelligence indicate that more 20-somethings are seeking housing. Here, BUILDER ranks the top 10 markets that are already attracting the millennial buyer with an increase in millennial new-home buyers in 2013 compared with 2012.
The ranking is developed by looking at new-home closings reported for ages 18 to 34 in 2013 for all Metropolitan Statistical Areas nationwide. From there, the top 50 for millennial new-home closings in 2013 were ranked by the percentage increase in reported home buying from 2012 to 2013 for the same age group, indicating the market is successfully attracting millennial buyers. These are the top 10 markets that showed the highest increase in percentage of new-home closings reported for millennials.
10. Spokane-Spokane Valley, Wash.
A few hundred miles east of Seattle, the Spokane-Spokane Valley market has a population of more than 290,000, approximately 20 percent of which are millennials ages 20 to 34, according to U.S. Census American Community Survey data. The market experienced a 3.4 percent increase in new-home sales to millennial buyers from 2012 to 2013. Although in 2014 the median new-home closing price in Spokane jumped to $242,800, a 3 percent increase over the previous year, homes are still within affordable reach for the young new-home buyer at a median $146 per square foot.
9. Cape Coral-Fort Myers, Fla.
The population of the eastern Florida market is more than 25 percent millennials and total market population approaches 250,000. The city of Fort Myers is relatively young with a median age of 37.6, so it comes as no surprise that more millennials are purchasing homes. The market has 1,007 total reported closings thus far in 2014, rapidly approaching the total of 1,513 for 2012, showcasing the market’s new-home demand growth overall. In addition to growth in home sales to millennials, the Cape Coral-Fort Myers market also is attracting active adult buyers.
8. Stockton-Lodi, Calif.
Stockton-Lodi is one of the few California markets drawing in entry-level buyers with significant price appreciation across the state. About an hour south of Sacramento, the Northern California market population of approximately 355,000 includes more than 20 percent adult millennials ages 20 to 34 and it experienced a 7.9 percent increase in new-home sales to the demographic in 2013. Like much of the state, however, affordability may cause a drop in sales to the younger buyer by the end of this year as the median new-home closing price for the market jumped from $359,500 to $402,700 in the first half of 2014.
7. Fort Collins, Colo.
A population of approximately 152,000—nearly 30 percent of which are ages 20 to 34—the Colorado market slightly over an hour north of Denver is attracting young buyers with a 9.1 percent increase in reported new-homes sold to millennials in 2013. The median new-home closing price in the market has been more than $250,000 for years. It has not experienced the dramatic price appreciation similar to other hot markets in the past year, with just a slight rise from $284,300 to $287,200 for new-home closings in 2014 so far, hinting that the market may continue to attract young buyer traffic.
5. Sacramento-Roseville-Arden-Arcade, Calif.
With a market population around 700,000—approximately 20 percent of which are between the ages of 20 and 34—the second Northern California market to make the list of top 10 markets attracting millennials had an increase of 9.2 percent of new-homes sold to Gen Y in 2013. Although the market has attracted millennial buyers for the past two years, Metrostudy regional director Greg Gross noted in his market summary at the 2014 Housing Leadership Summit that affordability likely will impede future growth in numbers of young buyers. So far in 2014, the market has 1,113 reported new-home closings at a median price of $389,100.
5. Madison, Wis.
Home to the University of Wisconsin Badgers, recent grads are sticking around the small Midwest market based on the 9.2 percent increase in millennial new-home buying, tying with Sacramento. A whopping 38 percent of the population falls within the age range of 20 to 34 and the median age in the college town area is just 35, according to Census data. Although the market continues to attract millennial buyers with nearly 25 percent of new homes closed in the past year sold to buyers ages 18 to 34, affordability may soon limit possibilities for young buyers as the market incurred a $48,000 price appreciation within the past year with a 2014 median closing price $295,900.
4. Daphne-Fairhope-Foley, Ala.
One of two Alabama markets in our top 10, the submarket is approximately 14 percent millennials ages 20 to 34 with a total population of around 58,000. The 12.8 percent spike in new homes sold to Gen Y in 2013 helped push the market to a spike of 24 percent in new-home closings overall. The number of closings so far in 2014 indicate a good year for the southern market across the bay from Mobile. Median home price still falls under $250,000 with a median new-home closing price at $234,900 in the first two quarters, highlighting affordability for the entry-level buyer.
3. Palm Bay-Melbourne-Titusville, Fla.
Considering only about 17 percent of the 226,000 population of the coastal Florida market is made up of adult-aged millennials, the 15.7 percent spike in their home buying from 2012 to 2013 speaks to the market heating up. Slightly over an hour southeast of Orlando, the Palm Bay-Melbourne-Titusville market can attribute nearly 20 percent of new-home closings in 2013 to millennials, despite most Florida markets being the largest baby boomer magnets. The market also maintains the highest affordability for the first-time buyer in the top 10 with a 2014 median closing price of $198,400—just slightly lower than 2013. With 433 new-home closings reported in 2014 thus far, the market is positioned to sell just as many new homes this year as last year with a strong possibility for a rise in sales.
2. Birmingham-Hoover, Ala.
Nearly a quarter of Alabama's Birmingham-Hoover population, a total number that approaches 300,000, is made up of millennials ages 20 to 34. The 23.9 percent spike in millennial new-home sales from 2012 to 2013 occurred despite a $52,100 rise in median closing price to $224,700 in 2013. Millennial buyers accounted for approximately 20 percent of new-homes sold in 2013. With an additional rise in median price now reaching $251,000 so far this year, however, it’s possible the market may not continue to attract such increases in Gen Y buyers based on lack of affordability.
Coming in first place is the capital of the Island State with a 26.6 percent increase in millennial new-home closings in 2013. About 22 percent of Honolulu’s urban population of approximately 350,000 are ages 20 to 34; the market is a definitive outlier from millennials flocking to affordability with a median 2013 closing price of $477,800. Millennials still accounted for about one-quarter of new-home sales in 2013, despite high price tags. The price continues to rise in the tropical city with the median closing price for new homes hitting $538,500 in 2014. Despite a slight decrease in new-home sales overall from 2012 to 2013, the market is speeding up this year with 360 new-home closings reported in the first quarter. Although affordability remains a key factor for young buyers overall, Honolulu tells us that even millennials understand great weather is priceless.