By Melanie Reuter
As housing becomes increasingly more expensive in major cities across North America, perhaps those feeling the biggest hit are Millennials (those aged 18-35). Although Millennials love their cities and want to remain in the hub of everything urban, their incomes cannot support their desires if they want to actually own their own home.
Bloomberg does a great job of showing the gap between median millennial earnings and median home prices. If an average 30 year old wants to buy a home in San Jose, she will need to earn an extra $80,000 a year. She would have better luck in Las Vegas, wherein the average Millennial would have an extra $6,853 to spend on, well, everything else after purchasing a median priced home.
Bloomberg used data from the U.S. Census Bureau, Zillow Group Inc. and Bankrate.com to quantify how much more money millennials would need to earn each year to afford a home in the largest U.S. cities.
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Urban Planners believe that as more Millennials start having children, the push to the suburbs will become stronger (perhaps more out of necessity than desire). Competition will be fierce for the areas in the suburbs that reflect the characteristics of a city: walkability, ease of access to restaurants, pubs, community centres, parks, employment, and schools. Suburbs that offer what is being coined as “diet cities” “cities light” and more recently “Urban-burbs” with a great mix of residential and retail will be the most coveted.
Real estate investors who are contemplating where to make their next purchase will be well served to consider the desire of Millennials, who comprise 1/3 of North America’s population. Build it and they will come, with strollers in tow.
Melanie Reuter is the Director of Research with REIN and a real estate investor owning both single and multi-family units. She has a Master of Arts Degree from California State University, San Bernardino and a BA from Simon Fraser University in Burnaby, BC.