St. Louis, Pittsburgh and Columbus Are the Most Affordable Areas for Millennial Homebuyers

Real Estate News & Analysis

St. Louis, Pittsburgh and Columbus Are the Most Affordable Areas for Millennial Homebuyers

In some coastal areas, only a small portion of homes are affordable to the typical millennial—but in certain inland cities, nearly 90 percent of the housing market is affordable for the generation.

St. Louis was the most affordable metro for millennials as of the end of 2018, with more than 88 percent of homes for sale affordable on a $68,805 annual salary, the median household income for a millennial in the area. Like St. Louis, the majority of the other most affordable places for millennial homebuyers are inland, with three in the state of Ohio. Of the top 10 most affordable areas, Columbus, Ohio was the only place where the share of homes within reach for millennials increased from 2017 to 2018. The rest saw their share of affordable homes decline.

“We work with a lot of millennial homebuyers in Columbus,” said Redfin agent Joseph “Butch” Wahlsmith. “Beyond affordability, millennials are attracted to Columbus because it’s a small city with big amenities and it’s centrally located with an international airport that gets you everywhere you need to go. Home to Ohio State University, it has a diverse economy with job opportunities in government, higher education, healthcare, technology and many other industries.”

In St. Louis, Redfin agent Amanda Hurtt said she’s noticed the area has become more popular over the last few years for millennials, particularly those who are buying a home for the first time. “With big employers like Boeing and Mastercard, St. Louis is experiencing a lot of employment growth right now. A lot of millennials are moving into the area for jobs,” Hurtt said. “One thing I’ve noticed about the generation is that they aren’t afraid of projects: If a home’s location and layout works, they’ll put work into it and make it their own.”


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By contrast, the 10 least affordable metro areas for millennials, who are currently between 23 and 38 years old, are all in coastal states like California, New York and Florida. In Los Angeles, which had the lowest share of homes affordable for millennials in 2018, just 18.5 percent were within reach. San Jose, San Diego and San Francisco are also among the regions with the smallest portion of affordable homes for millennials, all with less than 40 percent of homes affordable to young professionals. And in all the areas except Miami, which has remained essentially flat, the percentage of affordable homes for sale dropped from 2017 to 2018.

Overall, 67.3 percent of homes across all the metro areas Redfin tracks were affordable for millennials in 2018, down from  71.2 percent in 2017.

For this report we considered all homes that were active on the market at any point in 2018 and 2017. We calculated the share of homes in each metro area that were affordable during each year to a household making the median income in that metro area, assuming a 20 percent down payment, an interest rate of 4.64 percent for 2018 and 3.95 percent for 2017, and a monthly mortgage payment no more than 30 percent of gross income. The data in this report is limited to households with an age range of 24 to 44, which is a census-designated age group. The Pew Research Center defines millennials as those those born between 1981 and 1996, or people who are currently 23 to 38 years old. The median household income in the US is essentially flat from ages 38 to age 44, meaning the typical income doesn’t increase from ages 38 to 44.

Most Affordable Housing Markets for Millennials

Metro area Median income (2018) Share of homes for sale affordable on a median income (2018) Change (in percentage points) in the share of affordable homes for sale from 2017 to 2018
St. Louis, MO $68,805 88.1% -1 pt.
Pittsburgh, PA $70,169 87.5% -1.3 pts.
Columbus, OH $71,181 87.1% 0.6 pts.
Cincinnati, OH $68,511 85.9% -2.9 pts.
Hartford, CT $76,235 85.7% -4.5 pts.
Kansas City, MO-KS $71,313 85.2% -1.2 pts.
Minneapolis, MN $83,933 85.1% -2.7 pts.
Cleveland, OH $56,151 84% -4 pts.
Indianapolis, IN $62,054 83.5% -4 pts.
Oklahoma City, OK $60,462 82.8% -2.9 pts.

 

Least Affordable Housing Markets for Millennials

Metro area Median income (2018) Share of homes for sale affordable on a median income (2018) Change (in percentage points) in the share of affordable homes for sale from 2017 to 2018
Los Angeles, CA $72,654 18.5% -5.3 pts.
San Jose, CA $132,609 22.4% -11.3 pts.
San Diego, CA $78,433 24.3% -7 pts.
San Francisco, CA $120,587 37.1% -5.1 pts.
Riverside, CA $65,395 48.6% -7.7 pts.
Sacramento, CA $69,851 48.8% -7.1 pts.
New York, NY $83,410 51.8% -5 pts.
Seattle, WA $91,364 53.7% -8.1 pts.
Miami, FL $59,520 54.3% -0.1 pts.
Portland, OR $80,348 62% -2.1 pts.

“Millennials who dream of owning a home will have better luck if they move inland to places like St. Louis, Columbus and Pittsburgh. These cities used to have economies that relied heavily on manufacturing, and during the recession a lot of young people moved away in search of jobs. However, now these cities have more diverse economies based on education, healthcare and technology, and there are open jobs with salaries that are high relative to cost of living,” said Redfin chief economist Daryl Fairweather. “But millennials may want to move as quickly as possible because even in most inland cities the share of homes affordable to the typical millennial is shrinking as housing prices go up.”

Click here for a downloadable spreadsheet with affordability data on 49 major U.S. metro areas.

METHODOLOGY

For this report we considered all homes that were active on the market at any point in 2018 and 2017. We calculated the share of homes in each metro area that were affordable during each year to a household making the median income in that metro area, assuming a 20 percent down payment, an interest rate of 4.64 percent for 2018 and 3.95 percent for 2017, and a monthly mortgage payment no more than 30 percent of gross income. The data in this report is limited to households with an age range of 24 to 44, which is a census-designated age group. The Pew Research Center defines millennials as those those born between 1981 and 1996, or people who are currently 23 to 38 years old. The median household income in the US is essentially flat from ages 38 to age 44, meaning that based on this dataset, people aged 39 to 44 are essentially able to afford the same home prices as millennials.

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