The 10 most popular urban housing markets for millennial home buyers

February 13, 2022 7:23 PM

Millennials are in their prime home buying years, but several factors hinder their homeownership goals.

The age group, defined by the Pew Research Center as those born between 1981-96 or ages 25 to 40, only makes up 43% of homeowners, the lowest homeownership rate of any generation, according to a Legal & General survey. Millennials are spending the highest percentage of monthly income on homeownership costs compared to other generations, Hometap found. Student loans also weigh heavily, with a third of college-educated people saying the debt greatly impacts their home buying capacity.

Still, millennials make up the largest home buying group in the U.S. and they are borrowing on a majority of the homes in the nation’s largest cities, according to a LendingTree report. The top ten metro areas where they've taken out the greater share of mortgages share common characteristics: vibrant city life and easy access to the outdoors; affordable down payments or promising equity growth; and most importantly, high-paying technology jobs.

“They make up the largest share of homebuyers in many of the nation’s largest metros,” said Jacob Channel, LendingTree senior economic analyst and report author. “As they continue to get older, get married and start families, the homeownership rate among millennials is likely to rise even further."

LendingTree analyzed nearly 480,000 mortgages given to millennial borrowers in the nation’s 50 largest metros in 2021 and ranked the cities where lenders were offering the largest share of mortgages to that age group. Local mortgage experts told National Mortgage News about what makes these cities millennial magnets.

Raleigh, North Carolina.

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Raleigh, North Carolina

Share of mortgages offered to millennials: 56.60%
Average millennial age: 32.24
Average credit score among millennials: 720
Average down payment amount among millennials: $44,943

Local Professional: Edyta Rhodes, branch manager at Service First Mortgage in Raleigh, North Carolina. Rhodes has worked in the mortgage industry in the Raleigh area for 20 years.

Why is Raleigh one of the most attractive markets for millennial homebuyers?
“We have a ton of new companies moving in. There’s plenty of job opportunities in areas millennials find attractive: computer sciences, pharmaceuticals and sciences. We have DPAC (Durham Performing Arts Center), which is a huge performing arts center that attracts a lot of high-quality performers. The last 10 years, as the population changed, the culinary scene changed her as well. It’s a very attractive foodie market.

“The schools in Raleigh generally speaking compared to other parts of the country are very good. We have a number of sports teams in our area that they can go and see and take their kids to. There’s the symphony orchestra and the Koka Booth Amphitheatre. There’s a ton of outdoor festivals as well. The average home price, I’d say, would be somewhere around $400K for millennials. The housing market is absolutely insane.”

The Canal Walk in Indianapolis.

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Indianapolis, Indiana

Share of mortgages offered to millennials: 56.87%
Average millennial age: 31.68
Average credit score among millennials: 710
Average down payment amount among millennials: $34,796

Local Professional: Matt Milender, a senior loan officer with Golden Oaks Lending. Milender has worked in the mortgage industry in the Indianapolis area for 10 years.

Why is Indianapolis one of the most attractive markets for millennial homebuyers?
“People are leaving California and the East Coast because it’s too expensive, and they’re finding affordable places in the Midwest. Indianapolis has a pretty diverse workforce. Because of our geocentric position in the country, every place that has any type of logistics has a presence in Indianapolis.”

“I always thought of Indianapolis as more of a suburban-type city but the downtown area is growing because of millennials. There’s a lot more condos, a lot more concerts. There’s a push to keep downtown rejuvenated. I’ve had people relocating from other parts of the country but it’s more California and Florida. The $34K down payment is a decent amount, I see millennials with that type of money.”

Milwaukee, Wisconsin

Share of mortgages offered to millennials: 56.99%
Average millennial age: 32.06
Average credit score among millennials: 712
Average down payment amount among millennials: $34,278

Local Professional: John Stearns, loan officer at American Fidelity Mortgage Services. Stearns has been working in the mortgage industry in the Milwaukee area for 28 years.

Why is Milwaukee one of the most attractive markets for millennial homebuyers?
“We’re more of a tech town. Back in the 80s, (Milwaukee) was big in manufacturing. It has taken a hit in the last decade or two but we still have big manufacturing like the Miller brewery. Lake Michigan is huge. There’s boating, sailboats. We’ve got a yacht club in Milwaukee. You go north of Milwaukee there’s good surfing, oddly enough. There are beaches all along the coast, good sailing and windsurfing.”

It’s a mix of everybody moving here, I just had people moving from California last week. They’re moving into the surrounding suburbs too. Affordability is a big reason, Milwaukee is by no means priced like the East Coast or West Coast. The [$34K average] down payment, that’s higher than average.”

San Jose, California

Share of mortgages offered to millennials: 58.08%
Average millennial age: 33.42
Average credit score among millennials: 734
Average down payment amount among millennials: $120,847

Local Professional: Shashank Shekhar, founder and CEO of San Jose-based InstaMortgage since 2008.

Why is San Jose one of the most attractive cities for millennial homebuyers?
“San Jose and San Francisco have been the hub of technology for almost 30 to 40 years now. It has been an attraction for millennials who are in high-tech jobs because this is probably the highest-paying area in the country. San Jose downtown has become a really cool place to hang out, from new restaurants to the pubs to everything that you see there. You can go skiing three hours up north, there are beaches, which are a 15 minute drive from San Jose. San Francisco again is another 45 minutes to an hour’s drive.”

“The San Jose millennial average age is much higher than most of the other cities because if you're buying here you probably are buying an average home price of $1 million. There are factors to dissuade millennials from buying here. Even then, I think the entire job environment and everything that Silicon Valley offers is lucrative enough for a lot of millennials to continue moving here and buying homes.”

Salt Lake City, Utah

Share of mortgages offered to millennials: 58.80%
Average millennial age: 31.72
Average credit score among millennials: 729
Average down payment amount among millennials: $57,120

Local Professional: Don Worthington, division manager at Primary Residential Mortgage.

Why is Salt Lake City one of the most attractive cities for millennial homebuyers?
“That lifestyle of somebody who wants to go to work and go hiking or camping in the mountains is becoming quite a big draw. The mountains are 20 minutes from downtown. A lot of high-end tech jobs are drawing a lot of employment. Within a three-hour drive, there’s Zion National Park, Desert National Park to the south, to the north, Yellowstone, the mountains of Idaho.”

“If you want that downtown vibe, that suburban vibe, the clubs, the restaurants, you’re a 15-to-20-minute drive from everything. Utah has a lot of stereotypes but today it is a very culturally diverse city and state. It’s not the same Utah of 20 years ago. It’s just a very young, vibrant state and city that has been growing exponentially. Compared to the midwest, it’s a lot more expensive to live here, but it’s very affordable compared to California.”

Pittsburgh, Pennsylvannia

Share of mortgages offered to millennials: 59.34%
Average millennial age: 32.29
Average credit score among millennials: 720
Average down payment amount among millennials: $30,819

Local Professional: Justin Lazzaro, vice president of mortgage lending at Guaranteed Rate. Lazzaro has been working in the mortgage industry in the Pittsburgh area since 2014.

Why is Pittsburgh one of the most attractive cities for millennial homebuyers?
“Pittsburgh historically has had an older population, but I think that’s changing with some of the tech companies having a bigger presence here. Carnegie Mellon University produces a lot of tech students. A lot of the students historically have gone to Silicon Valley but are staying in Pittsburgh. I think it's a shift from a blue collar city to more of a tech base.”

“Pittsburgh does have a very big-city feel without New York City prices. Millennials, people my age, we’re going to love that. We have great sports teams. We have great restaurants here. There’s some great things to do around the city that we just didn’t have 20, 30 years ago. The [$30K average down payment] is probably a little rich — in my experience it’s a little bit cheaper.”

Austin, Texas

Share of mortgages offered to millennials: 60.46%
Average millennial age: 32.76
Average credit score among millennials: 726
Average down payment amount among millennials: $51,349

Local Professional: Joel Richardson, branch manager at PrimeLending. Richardson has been in the mortgage business in the Austin area for 21 years.

Why is Austin one of the most attractive markets for millennial homebuyers?
“It has to do with the high-tech firms moving here. You get younger people, you get the spinoff businesses, the smaller start-ups. Austin’s kind of sexy. It’s got a lot of outdoor stuff to do, a lot of nightlife. You have the South by Southwest music festival, a Formula One race. It’s got a very accessible airport to get in and out of, it’s got warm weather. There are great restaurants. It’s hard to get a dinner reservation.”

“Suburbs that were selling at $250K five or six years ago, their prices are now $450K. Millennials are going out into the suburbs and further away. There’s not much housing. They can’t build them fast enough.”

Boston, Massachusetts

Share of mortgages offered to millennials: 61.08%
Average millennial age: 32.73
Average credit score among millennials: 728
Average down payment amount among millennials: $59,599

Local Professional: David Silverman, vice president of lending at Guaranteed Rate. Silverman has worked in the mortgage industry in the Boston area for 27 years.

Why is Boston one of the most attractive markets for millennial homebuyers?
“It’s a great, safe, clean, walkable city that’s 30 minutes to great beaches and 45 minutes to ski mountains. There’s a great airport to fly out internationally or domestically. The food and entertainment scene has been really upgraded a lot over the past decade.

"You’ll never get an offer in Boston or Cambridge with 10% down on a $500K home. [Millennials] are buying a $700K condo and they’re putting 20%, 25% down between savings and gifts. They’re getting paid a lot of money with a lot of great jobs here. They don’t want to rent, they want in on the Boston real estate market, where there’s 5 to 10% yearly returns in equity. Not just in Boston but the suburbs.”

Seattle, Washington

Share of mortgages offered to millennials: 61.35%
Average millennial age: 32.87
Average credit score among millennials: 725
Average down payment amount among millennials: $85,677

Local professional: Martin Choi, operations manager at Westwood Mortgage. Choi has been working in the mortgage industry in the Seattle area for more than 15 years.

Why is Seattle one of the most attractive markets for millennial homebuyers?
“All the new tech companies moving up here are bringing a lot of talent. We don’t have income tax here, so that's helpful. There’s diversity, there’s tons of different cultures here. There’s good food and unique things to see and do. It’s not too big like New York or Los Angeles but not too small. We just tell everyone it rains a lot so they don’t come out here.”

“We have great springs, summers and falls, just horrible winters, nice and gray. But not as crazy as Minnesota or Chicago. All the outdoor sports are within 30 minutes to an hour. If you’re an outdoors person, Washington is for you. It’s a tight housing market, but with the tech industry, people make a lot of money too.”

Denver, Colorado

Share of mortgages offered to millennials: 63.63%
Average millennial age: 32.09
Average credit score among millennials: 723
Average down payment amount among millennials: $53,750

Local Professional: Dave Cook, branch manager at Celebrity Home Loans in Denver. Cook has worked in the mortgage industry in Denver since 2004.

Why is Denver the most attractive market for millennial homebuyers?
“Denver has everything going for it. We have mountains, skiing and hiking is a huge attraction. The millennial generation loves good food and they love good beer. We have some of the most amazing breweries here. A lot of couples that are millennials are moving from older cities in Ohio or Chicago. The weather here is amazing compared to those other cities.”

We have tech, we have all these different industries that keep our economy well-balanced. Denver holds up with the coastal cities because while we don’t have the water, we have the mountains, we have so many of the things that make coastal cities attractive. It has that vibe of being a hot place, but you don’t have the crazy cost that you would have in an East Coast or West Coast type of city. I think millennials see Denver almost like the gold rush days. They see the city as an opportunity.”