Incline Village real estate blog, Lake Tahoe real estate blog.

Rentals Feeling First Signs of Millennials' Impact

Like their baby-boomer parents before them the millennial generation appears to be starting to drive parts of the housing market.  While their delay in forming households and buying homes has been the subject of much comment and research, RealtyTrac says they now appear to be impacting rentals. 

The California company recently released an analysis of fair market rents and median home prices in over 500 U.S. counties.  The study found that, while buying is still more affordable than renting in many parts of the country, in those markets where the millennial population has increased the most rentals are a bigger bargain. 

While the definition of millennial is at rather squishy at best, RealtyTrac used a different one than most studies which peg the birthdates of that generation as occurring between the early 1980s and the first few years of this century.  RealtyTrac used the years 1977 to 1992.

The company looked at 2015 fair market data from the Department of Housing and Urban Development (HUD) for both rentals and home prices in 543 counties with population over 100,000.  In 473 of those counties renting a three bedroom apartment requires an average of 27 percent of the median household income in the local area while buying a median priced home of that same size requires 25 percent.  The company said that buying was more affordable than renting in 68 percent of the counties analyzed, representing 57 percent of the total population in those counties.

In the 25 counties where the millennial population had increased the most between 2007 and 2013 renting that three bedroom apartment in 2015 will require 30 percent of the median income but buying will consume an average of 36 percent.   

 

 

"First-time buyers and potential boomerang homebuyers are stuck between a rock and a hard place in today's housing market: many of the markets with the jobs and amenities they want have hard-to-afford rents and even harder-to-afford home prices; while the more affordable markets have fewer well-paying jobs and tend to be off the beaten path," said Daren Blomquist, vice president at RealtyTrac. "Those emerging markets with the combination of good jobs, good affordability and a growing population of new renters and potential first-time homebuyers represent the best opportunities for buy-and-hold real estate investors to buy low and benefit from rising rents in the years to come."

The three counties with the largest increases in their millennial population - over 50 percent in each case - were Washington, DC, San Francisco and Denver.  Other large increases were noted in New York, Nashville, Portland, St. Louis, Seattle, Minneapolis and Charlotte.  In these and the other cities in the top 25 millennial magnets the fair market rent averaged $1,459.  This was 19 percent higher than the average for all counties analyzed. 

Rents had increased an average of 3 percent in these 25 counties with the largest increases (over 20 percent) in Denver County and Midland County, Texas.  At the same time rents increased by 9 percent in counties popular with the younger generation compared to 6 percent in the nation as a whole.

These counties did have a slightly lower unemployment rate but only by a small amount.  The 25 counties averaged 5.2 percent compared to 5.5 percent for all counties analyzed.

Aside from the issue of the millennials' impact the top counties in terms of increasing rents were Williamsport, Pennsylvania, Elizabethtown, Kentucky, and Midland.  In each case fair market rents increased at least 24 percent compared to the previous year.  Both Williamsport and Midland are part of the energy boom while there is a military installation in Elizabethtown.  Other markets among the top 25 for increasing rents included counties in Denver, Asheville, North Carolina, Chicago and Santa Barbara.

Average fair market rent in the top 25 counties was $1,327, 8 percent above the average for the total 543 counties analyzed, and would require 25 percent of median household income.  Buying a median priced home in the 25 counties would require an average of 27 percent. Median home prices have increased 6 percent over the last year both in the 25 counties and in the entire study universe. . 

The average unemployment rate among these counties was 4.9 percent compared to that 5.5 percent overall average.

At the other end of the scale rents have decreased at least 13 percent over the past year in Sumter, South Carolina; Las Cruces, New Mexico; and Longview, Texas.  Other counties with decreases included several college towns, Bloomington and Champaign-Urbana, both in Illinois, College Station Texas; and Terre Haute, Indiana along with Las Vegas.

The average 2015 fair market rent in the 25 counties with large rental drops is $1,023, 16 percent below the national average, and requiring 29 percent of median income.  Buying a median-priced home would require 23 percent. Home prices have increased in these 25 counties by 4 percent on average. The average unemployment rate among these counties was 6.7 percent.

The least affordable counties were in New York, Baltimore, Philadelphia, Miami, Virginia Beach, San Francisco, Eureka, Calif., and Los Angeles. Fair market rents averaged $1,686, 38 percent above the national average and, in the top ten, required at least 42 percent of median household income while buying requires 44 percent. Home prices have increased an average of 3 percent in the least affordable counties over the last year and the unemployment rate is a full percentage point above the national average.

 

The top counties where fair market rents were most affordable were in Columbus, Ohio, Indianapolis and Nashville.  Also on the list were counties in Atlanta, Cincinnati, Milwaukee, and Houston. Fair market rents averaged $1,019, 17 percent higher than the national average and require 26 percent of median household income on average (but in some areas required less than 15 percent) while buying a median-priced home requires 12 percent of household income on average.

Median home prices in these affordable markets were flat compared to a year ago and the unemployment rate averaged 5.8 percent.

SOURCE: www.mortgagenewsdaily.com

No comments have yet been submitted for this entry.

Join the conversation by filling out the form below.

Your email address will not be displayed.
http://www.example.com

Syndication

Categories

Archives

Share This Page

Contact Information

LakeshoreRealty.com
Lakeshore Realty
954 Lakeshore Blvd.
Incline Village NV 89451
775-831-7000
800-954-9554
Fax: 775-831-6777

LAKESHORE REALTY

Lake Tahoe's Incline Village Real Estate Market Experts & Home Sales Professionals

Real Estate Digital Marketing & SEO Web Content by EMEREALD | Digital Real Estate