More than any other age group, millennials are feeling the one-two punch of tight inventory and consistently climbing housing prices. Realtor.com, in fact, calls the current state of the market “the toughest home buying season in history” in a new look on which metros are the hardest for millennials to buy into.
“Millennials want to buy, but record-low inventory is making it extremely difficult,” said Danielle Hale, Chief Economist for Realtor.com. “Our analysis shows millennials are facing challenges in both established markets such as San Jose and Seattle, as well as more recently popular areas like Omaha and Salt Lake City.”
Minneapolis is in the top five too. According to the report, homes in these five cities are increasingly out of reach for millennial buyers, despite that this group of buyers is flocking to them for their strong economies and high-paying jobs.
“As a result, millennials make up a higher share of the population, at 14.6 percent, compared to 13.4 percent for the U.S.,” the report stated. “Household income among 25- to 34 year-olds in these five locations is also significantly higher, at roughly $79,000, compared to the U.S. median of $59,800.
And millennials are definitely interested in buying. Realtor.com said that in the first quarter, millennials accounted for 25 percent of views, higher than any other age group.
But the economic hopes for San Jose, Seattle, Salt Lake City, Omaha, and Minneapolis are meeting with the economic realities of living there. While the median U.S. home price is $280,000, the median price in San Jose is $1.24 million. The report stated that the Bay Area is “replete with young students and scholars” chasing tech salaries—the average millennial salary in San Jose is $102,000 a year—at companies like Google and Apple. The competition for houses, therefore, is intense, and non-tech workers are increasingly getting shoved to the outskirts of the city.
The same story is occurring in the other four cities, just with different numbers. Millennials average $78,300 a year in Seattle, where the median home price is $533,000; they average about $68,000 a year in Salt Lake City, where the median home is almost $400,000; $73,600 a year in Minneapolis, where the median house can cost $283,000; and $63,500 a year in Omaha, where the median home price is the same as in Minneapolis.
All that combines with especially low inventory. Nationally, inventory is 35 percent lower than the spring of 2012, the report found. Compared to this time last year, active listings in these five metros remain 8 percent lower, the age of inventory is 7 percent lower, and list prices are 8 percent higher.
“Supply is nearly three times lower than the rest of the country, at 5.7 listings versus 16.1 listings per 1,000 households,”: the report stated. “Additionally, listings in these areas are scarcer and selling faster for more money. In these five metros, active listings are 9 percent lower, the age of inventory is 13 percent lower, and list prices are 14 percent higher from a year ago.”