The Most Popular Cities For Millennial Home Buyers

Real Estate

With millions of Millennials moving into their prime home-buying years, they represent a hot emerging market that is looking all over the country for a place to call home.

Metros in the South and West will likely continue to lead the nation in new home sales, according to CoreLogic, a leading analytics and data services provider. Family incomes are expected to rise and mortgage rates to remain low through 2020, while household growth and the need for additional home construction will continue.  

The number crunchers at LendingTree analyzed new purchase mortgage requests made in the nation’s 50 largest metros on its online lending marketplace to determine which cities are the most popular for Millennial home buyers. The mortgage requests and offers were for borrowers 23 to 38 years old made from January 1, 2019 to November 31, 2019, along with requests from the total population of mortgage seekers based on the property location. Here’s what they found: 

Minneapolis; Buffalo, New York; and San Jose, California, are the metros where Millennials make up the largest percentage of purchase requests. In Minneapolis, 56.2% of purchase requests came from this generation. In Buffalo, New York, and San Jose, California, the numbers are 56.1% and 55.8%, respectively.

In Tampa, Las Vegas and Miami, Millennials are making fewer purchase requests. Millennials (defined as born between 1981 and 1996) made just 40.3% of the purchase requests in Tampa and Las Vegas, and only 43.6% of the purchase requests in Miami.

Millennial home buyers in San Francisco, Los Angeles and San Jose were the oldest entry-level buyers in the study. The average age for these three areas was 31.6 years old, nearly a year older than the average 30.8 across the remaining 47 largest metros in the country.

Buffalo, Detroit and Minneapolis are the metros with the youngest potential Millennial home buyers. The average age for these three areas was 30.2 years old.

“These cities don’t have a particular feature in common that we identified,” said Tendayi Kapfidze, chief economist at LendingTree. “What we found to be of interest is that Millennials are a driving force in such a diverse set of cities. This speaks to Millennials entering a life stage in which they are better able to access homeownership. They have had time to save up for down payments, some may be emerging from student debt, and other life milestones such as marriage and children may be motivating others to buy.”

San Jose, San Francisco and San Diego are markets where potential Millennial home buyers had the highest average credit scores, according to LendingTree. The average credit score for these three areas combined was nearly 711. By comparison, the average credit score for Millennial home buyers across the 50 largest metros in the country was 658.

“San Jose is expensive because housing stock has not kept up with demand,” said Kapfidze. “Some of this is because the tech industry has been attracting a lot of people with high-paying jobs to the region. As a result, buyers there have to pay larger down payments and have higher credit scores, contributing to buyers there having a higher average age.”

Millennials in Oklahoma City, Memphis and Louisville, Kentucky, had the lowest average credit scores. Credit scores in these three areas were 633, 632 and 625, respectively.

Here are the most popular cities among Millennial home buyers.

1. Minneapolis

Share of mortgage requests coming from Millennials: 56.2%

Average Millennial age: 30.4

Average Millennial credit score: 672

Average down payment amount: $31,812

Average requested loan amount: $219,590

2. Buffalo, New York

Share of mortgage requests coming from Millennials: 56.1%

Average Millennial age: 30.1

Average Millennial credit score: 652

Average down payment amount: $20,777

Average requested loan amount: $137,739

3. San Jose, California

Share of mortgage requests coming from Millennials: 55.8%

Average Millennial age: 31.7

Average Millennial credit score: 720

Average down payment amount: $148,098

Average requested loan amount: $637,201

4. Denver

Share of mortgage requests coming from Millennials: 55.3%

Average Millennial age: 30.8

Average Millennial credit score: 682

Average down payment amount: $49,361

Average requested loan amount: $316,524

5. Salt Lake City

Share of mortgage requests coming from Millennials: 54.9%

Average Millennial age: 30.5

Average Millennial credit score: 675

Average down payment amount: $39,071

Average requested loan amount: $264,275

The biggest challenges for Millennial home buyers are having enough money for a down payment and a good credit history. Potential buyers should educate themselves on how to improve their credit scores and create a savings plan to raise their down payment.

From a housing market perspective, tight inventory is boosting prices in many markets, and new construction isn’t keeping up with high buyer demand. As affordability declines, borrowers should consider all of the programs available to assist them in becoming homeowners such as low down-payment loan options and government-insured loans.

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