Home >> Daily Dose >> Millennial Demand Forcing Rise in Home Prices
Print This Post Print This Post

Millennial Demand Forcing Rise in Home Prices

According to Zillow, home values are growing fastest in areas with the highest population of children, reflecting the impact millennial homebuyers are making on family-friendly neighborhoods with a shortage of homes for sale.  

Zillow data found that a record number of millennials will reach key age milestones—specifically age 32—for home buyers over the next two years, which may continue to accelerate price gains even further. The top 10% of ZIP codes with the largest share of kids in each county analyzed saw an average of 21.3% growth from October 2020 to October 2021, compared to 17.6% in ZIP codes with the smallest share of kids.  

Home values in ZIP codes with a higher share of kids younger than 18 are growing faster than homes elsewhere due to demand from millennials looking for homes that meet the needs of their growing families. 

"As millennials go, so goes the housing market, and we are seeing now, as millennials age, that they are looking for homes that fit the needs of growing families," said Zillow Economist Nicole Bachaud. "Millennial demand has helped push up home prices in areas with the most children. Competition for homes in these family-friendly areas should intensify in the coming years as more millennials reach the key age of 32, adding to the affordability squeeze."

 

The top 10 metros with the highest percentage of children (with ZIP code) include: 

  1. New York, New York, 08701 (48.3%) 
  2. Los Angeles, 92694 (37.0%) 
  3. Chicago, 60585 (34.1%) 
  4. Dallas, 75253 (36.5%) 
  5. Philadelphia, 08104 (32.6%) 
  6. Houston, Texas, 77032 (40.6%) 
  7. Washington, D.C., 22060 (41.1%) 
  8. Miami, Florida, 33327 (33.8%) 
  9. Atlanta, 30021 (33.3%) 
  10. Boston, 02052 (29.9%) 

Home value growth in these family-friendly areas began to outpace nearby ZIP codes in 2013, and the correlation between kids and home value growth has been nearly perfect for each year since 2017. That first wave of early-30s millennials had the benefit of discounted home prices as a result of the Great Recession; where home values in these family-friendly ZIP codes were hit particularly hard between 2008 and 2011, during the nationwide housing crash.  

Modern day first-time home buyers are seeing a much different market, especially as housing supply is diminishing and home price growth has reached record highs during the pandemic.  

As millennials reach the peak age for first-time home buyers, number have grown during the past nine years, and expected to increase significantly. An average of 200,000 more Americans will turn 32 this year than in 2021; the biggest jump since the transition from Generation X to millennials in 2013. This demographic is projected to fuel even more rapid price growth in family-friendly ZIP codes over the next two years, making saving for a down payment even more challenging for first-time buyers. 

About Author: Demetria Lester

Demetria C. Lester is a reporter for DS News and MReport, with more than six years of writing experience. She has served as Editor-in-Chief at Northlake College and staff writer at her alma mater, the University of Texas at Arlington. She has covered events such as the Byron Nelson, Pac-12 Conferences, the Women in Dallas Film Festival, to freelance work with the Dallas Wings and D Magazine. Currently located in Dallas, Texas, she is an avid jazz lover and reader. She can be reached at [email protected]
x

Check Also

Most Areas Report Declining Contract Activity

The Pending Home Sales Index (PHSI), which measures housing contract activity, again fell in August, ...