Priced out of the housing market in the biggest cities, millennials are leaving behind their urban apartments for suburban and rural homes.
Millennials, born 1981–1996, make up a large demographic. So large in fact, they’re set to overtake Baby Boomers as the largest living adult generation. But they aren’t overtaking their parents’ generation in other records. Studies show millennials aren’t buying homes at the same rate as Generation X or Baby Boomers, and when they do, they’re looking outside of the city.
Let’s take a look at some of the reasons why millennials are buying homes in suburban and rural markets.
Millennials Had a Slow Start
The millennial generation was shaped by the 2008 recession. If you’re an older millennial, the economic downturn would have affected your early career. If you’re one of the younger millennials, it would have impacted your education — from the tuition you paid and the student loans you potentially still owe.
These hurdles slowed or even delayed many millennials ability to save for homes, as well as other financial benchmarks.
CNBC reports this generation is behind in retirement savings. More than a third of millennials have no money set aside for emergencies. And while most millennials want to buy a home, nearly half don’t have anything saved for a down payment.
Soaring Housing Costs
Put simply, houses cost more today than they did yesterday. Of course, it’s normal for prices to rise over time — that’s simply inflation. However, inflation pushes prices up by 1–2 percent each year. Housings costs, on the other hand, rise by more than double that.
According to U.S. Census data, the median home price in 1940 was $2,938. If you adjust this for inflation, a home would have cost just $30,600 in 2000 money. But in 2000, the median home price was actually $119,600.
Suburbs and Exurbs Housing Markets More Affordable
Millennials have less saved while facing some of the highest costs for housing. They simply can’t afford some of the biggest metro areas. The suburbs, by comparison, are a lot cheaper, and they come with a lot more space. As a result, the suburbs are growing twice as fast as cities.
Some are even turning to the exurbs, a term to describe the area beyond the suburbs. Or, in other words, the rural land surrounding suburbia.
The rural housing market is even cheaper, so millennials can get more home for less money. In gaining acreage, they trade in commodities, so you need to consider the commute you might face by moving out to the country.
Even if you’re a remote worker or digital nomad, a long drive to the grocery store or to friends will impact your living situation. But these obstacles may be worth the move if it gets your foot on the property ladder. If you’re considering a rural home, speak with a local credit union to see what sort of prices are available.
Most rural residents often prefer credit unions to help them with their mortgages. A local credit union brings a small-town approach to your banking needs, so they can provide a personalized solution.
For many millennials, the solution to homeownership isn’t in the city. Suburban and rural housing markets are cheaper, making them easier to break into as a first-time homeowner.
Regardless of where you’re looking, the saving will have to be your priority. Without a decent down payment, buying any home — whether urban, suburban or rural — will be a challenge. Putting aside savings may help your home-buying dreams come true.
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