The pandemic offered time to reevaluate what is important about where and how we live, and this mindset shift encouraged some to move over the past year. Low taxes, access to relatively affordable housing, and good weather were among the driving factors, as well as being close to family.
The desire to be close to family is the subject of the Zonda Baby Chaser Index, which tracks the top markets across the country that are attractive to the barbell of demographics: millennials and baby boomers, and the results of the fourth annual report show the love of the South persists.
The Baby Chaser Index was created after Zonda research found that roughly 25% of baby boomers plan to retire in a location near their millennial children and grandchildren, a decision that earns them the name “baby chasers.” To understand the markets that are ripe for baby chasers, the index was developed considering longer-term migration patterns as well as current trends for both millennials and baby boomers.
The index shows markets in the Southeast and Southwest hold all of the top 10 spots:
- Austin, a top migration market for years, lands as our best baby chaser market for the fourth year in a row;
- Raleigh, the Southeast employment hub, is the No. 2 baby chaser market, tied with the rank last year;
- Phoenix landed in the top three in 2021, following an ascent from No. 10 in 2018; and
- San Antonio jumped into the top 10 this year, up from No. 12 in 2020.
To learn more about what makes these markets attractive to the two cohorts, I connected with my Zonda co-workers Vaike O’Grady, our regional director for Austin, Shaun McCutcheon, our vice president of advisory in the Southeast, and Steven Hensley, our manager of advisory in Phoenix.
Austin’s Thriving Economy Creates a Virtuous Cycle
O’Grady recognizes that the many accolades Austin has earned over the past few years haven’t been lost on millennials—or their parents. The city and its outlying suburbs are often cited as great places to live and work; WalletHub recently named Austin the best capital city in the U.S. due to its high education levels and accompanying incomes. Many young people flock to Austin for its world-renowned University of Texas, then remain there to continue to enjoy the healthy lifestyle, funky culture, and natural beauty of the city. A good portion of the recent graduates start working in tech or tech-related fields; jobs in Austin’s tech industries make up 17.1% of all jobs compared with 9.2% nationally, according to the Austin Chamber.
Though the pandemic affected Austinites as it did everyone, the city has been quick to regroup and rebuild, O’Grady notes. Today, 97% of all pandemic-related lost jobs have been replaced, and unemployment levels are hovering below 5%. Those jobs and relatively affordable housing have prompted record-setting relocations from both coasts. And where the kids go, mom and dad often follow. Here in Austin, older buyers enjoy the (typically) mild winters, the variety of outdoor activities, and dining and entertainment options. Additionally, the kids and grandkids have plenty to do in the Hill Country.
Raleigh Offers the Best of All Worlds
North Carolina is a state that McCutcheon describes as a place that has the best of all worlds, with plenty of lifestyle, employment, and housing options. On the employment front, one of the reasons Raleigh is so attractive to millennials is due to the diverse job base. For example, the high-paying jobs in information, technology, and engineering help retain local graduates and attract well-qualified workers from inside and outside the market.
McCutcheon, a North Carolina transplant himself, sees migration coming from across the country, led by the Northeast and followed by the Midwest. California is not far behind with the recent announcement of a new $1 billion Apple headquarters in Wake County. Newcomers are attracted to the area for a variety of reasons, including relative affordability, lower taxes, and warmer weather than the North but milder than Florida. Further, unlike many markets across the country, there are still new homes being offered in Raleigh for as low as the mid-$200,000s. The low starting home price benefits locals, younger buyers, and relocation shoppers alike.
A great part about Raleigh is the diversity of housing options with a vast variety of locations, styles, and price points. The wide array of active-adult communities is particularly impressive. Baby boomers will find various community sizes (100- or 1,000-unit developments), an assortment of amenities (or 55-and-older communities with limited amenities to keep the HOA fees down), and a variety of price points (from $200,00 to over $700,000).
McCutcheon doesn’t see the attractiveness of Raleigh as a top migration destination slowing anytime soon. He does, however, note an unfortunate consequence of the increased demand: Some local buyers are finding themselves priced out compared with some of the relocators with deeper pockets.
Phoenix Economic Development Efforts Pay Off
Besides being home to Arizona State University, one of the biggest colleges in the country, a big draw for millennials to Phoenix is the growing and diversifying economy. Hensley shares that before the housing boom last cycle, Phoenix’s economy was dominated by services and construction. Local leadership realized that more job diversification would be good for economic prosperity and invested in attracting and retaining new businesses and created a pro-growth environment.
Growing tech employment along with industrial, distribution center, and financial services jobs create diversity and bring higher wages to the metro. While local incomes aren’t as high as places like Austin and San Francisco, the reasonable cost of living, low tax rates, and good quality of life are also attracting individuals from those traditional employment hubs. Like Raleigh, however, Hensley is watching the impact of migration on local residents.
For baby boomers, Hensley notes that Phoenix has historically been a desirable retirement market with nice weather eight months out of the year, plenty of indoor and outdoor activities, and a variety of different active-adult communities to choose from, most of which have great amenities and sell incredibly well. The inflow of new millennials to the market is only attracting more baby boomers into Phoenix, and both groups are contributing to strong housing demand.
As work from home became increasingly common throughout 2020, many Americans reevaluated their living situations and capitalized on the opportunity to move. Millennials, often moving for employment reasons, became a catalyst for some baby boomer parents to uproot as well. The markets that topped the 2021 Baby Chaser Index have many overlapping pull factors, and, as more people cluster together into select markets, the migration patterns can significantly impact and potentially transform the local economy and housing market.
