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We can learn a lot about a local housing market by understanding demographics and how the trends are shifting. Millennials are now the largest home buying cohort in the United States, and where millennials go, baby boomers often follow. This migration pattern is partly because 25% of baby boomers plan to retire to a location near their children and grandchildren, Zonda research shows.

This is the origin of Zonda’s annual Baby Chaser Index. The Baby Chaser Index looks at generational migration trends by combining long-term migration patterns with current changes for the millennial and baby boomer cohorts.

The latest index for 2021 shows:

  • Austin, Texas, regained its position as the No.1 baby chaser market after coming in second in 2020;
  • The two largest metros in North Carolina, Raleigh and Charlotte, round out the top three for 2021;
  • Nashville, Tennessee, and Dallas joined the top 10 in 2021, while Indianapolis and Denver dropped out; and
  • Every baby chaser market in 2021 was either in the Southeast or Southwest.

Texas Offers Culture, Jobs, and Natural Beauty

Austin regained its ranking as the No.1 baby chaser market after coming in second in 2020. Texas proved attractive to millennial and boomer buyers with Dallas (No.4) and San Antonio (No.7) also in the top 10.

Bryan Glasshagel, a Zonda Advisory senior vice president in Texas, says he wasn’t surprised to see Austin ranked high again. “If you want to live somewhere with natural beauty, a variety of indoor and outdoor activities, and a vibrant arts scene, Austin stands out,” he explains. The “vibe” in Austin is different than in other Texas markets given the unique culture, and those looking for variety will find it, from a lively central business district to the peaceful hill country.

Austin also offers relative affordability, especially compared with coastal markets from which many are moving. For example, Redfin data shows that 31% of home searches in Austin come from outside the metro, led by the Bay Area, Los Angeles, and Seattle. Many of the newcomers have moved to Austin to take part in the growing tech sector, with locals dubbing the area the “second Silicon Valley.”

The labor market is also a key reason for migration in Dallas, our other Texas top five market. Trends in the local economy often mirror national figures given the diverseness in industries and vastness of job opportunities. Dallas has seen new growth in response to remote work, but companies are also investing in office space locally, including Caterpillar and financial firms like JPMorgan, Wells Fargo, and Goldman Sachs.

Beyond the labor market, Dallas offers plenty of things to do given the expansive downtown, while also providing a vast array of multigenerational neighborhoods and single-family homes to meet the needs of millennials and boomers alike.

North Carolina Attracts Businesses and People

The two largest metros in North Carolina, Raleigh and Charlotte, land in the second and third spots on our annual list. Both metros share similar amenities in terms of location (within a reasonable drive to the mountains and the ocean), education, and economic opportunity. In fact, North Carolina was recently rated the No.1 state for business by CNBC.

Shaun McCutcheon, Zonda Advisory vice president in the Southeast and a transplant to North Carolina himself, says he sees the appeal of the market. “For Raleigh, millennials come to the city to take advantage of the great educational opportunities at UNC, Duke, and NC State. Many students end up falling in love with the area and are able to stay given the great job market,” he says. “Like Raleigh, Charlotte also has a strong job market, and many are attracted to the area given the cultural amenities in the downtown.”

The allure of North Carolina spans generations. Millennials' baby boomer parents also find Raleigh and Charlotte attractive given the moderate climate (especially when compared with Florida, the Midwest, and the Northeast), relative affordability, and connectivity through the interstate highway systems and the midsized airports.

Phoenix Shows its Staying Power

Phoenix is another regular on our baby chaser list, highlighting the enduring cross-generational appeal. Steven Hensley, Zonda Advisory’s senior manager in Arizona, says Phoenix’s attractiveness originally started with retirees. Retirees were drawn to the area given the nice climate for most of the year, with over 300 days of sunshine, and a variety of recreational activities like golfing, hiking, and biking.

Millennials are attracted to Phoenix for many of the same reasons, but the initial exposure for some starts with Arizona State University, the seventh largest university in the country in terms of enrollment. “There are great educational opportunities at ASU, and many of the students end up staying in Phoenix because of the solid job market,” Hensley explains. Investment in the local economy has allowed for diverse employment opportunities across many sectors, including technology, semiconductors, and logistics.

Issues to Watch

For each of our top baby chaser markets, there are signs that the rapid growth is starting to negatively impact the housing market. For example, some consumers in Austin are pausing on their home search given the softness in the tech industry, 30%-plus home price growth for two consecutive years, and higher interest rates. The monthly mortgage payment is also 37% higher than the end of last year given record price appreciation and rising mortgage rates.

Affordability is the key issue to watch in our baby chaser markets as out-of-state purchasers have driven home prices up past the point that many locals can afford. Locals, first-time buyers, and low-income folks are feeling the brunt of the higher costs, which are pushing some into the rental market and forcing others to reconsider where they want to live entirely. Even so, each of our local experts believe in the long-term staying power and growth potential of their respective markets given job opportunities, desirable climates, and the virtuous cycle of migration driving investment in the local economies.