This roundup shows where young workers have the best chances to buy a home.
Minnesota houses the city where millennials in the U.S. can afford the most expensive homes.
Over a third (42 percent) of millennials in Minneapolis own homes at an average cost of $222,528, says a study from GOBankingRates. Unemployment in the city is tied for the lowest in the country, making affordability possible.
Aside from Minneapolis, here’s the rest of the top 5 cities for millennials aspiring to own homes:
2. St. Louis, Missouri
- 40 percent millennial population
- $167,791 is the average millennial home value
- Unemployment rate is 2.7 percent
3. Nashville, Tennessee
- 37 percent millennial population
- $213,090 is the average millennial home value
- Unemployment rate is 2.3 percent
4. Indianapolis, Indiana
- 37.4 percent millennial population
- $161,856 is the average millennial home value
- Unemployment rate is 3.2 percent
5. Kansas City, Missouri
- 37. 1 percent millennials live there
- $170,254 is the average millennial home value
- Unemployment rate is 3.2 percent
Are millennials ready to stop renting?
Despite student debt holding millennials back from wanting to take on a mortgage, more seem ready to take the plunge into homeownership this year.
More millennials want to get married, and starting a family isn’t out of the picture. Now that they’re the largest age group in the workforce, it’s not unlikely that more would choose to settle down and purchase homes rather than rent forever.
The basics of homebuying
Millennials eager to take the plunge into homeownership should first brush up a little on some fundamentals.
Only eight percent of respondents knew what their debt-to-income ratio should be, says a survey from Ally Bank. Which is exactly what it sounds like — how much money we make compared to the debt we have. That ratio should be under 43 percent — and lower is much better — but the majority were unaware.
The worst offenders? Millennials, and then surprisingly, baby boomers.
Buying a home is a good investment
Right now homeowners have been making a $54,000, or 30 percent, return on their investment according to a study from data solutions company ATTOM. It never hurts to profit from your home after spending most of your monthly income for a roof over your head.
Of course this won’t really save millennials looking to buy right now. But what will add incentive is the Home Price Appreciation predictions, or increased value of the property over time. Let’s use Minneapolis as an example again: Purchasers should see a six percent increase in their HPA in only a year, and 47 percent in the next five years.
In Kansas City, No. 5 on GoBankingRates’ list, new homeowners should see an HPA increase of 13.4 percent in only a year. But that rate will slow to only 37 percent total in five years, which is a lower HPA prediction than many cities on the list.
Marriage could spur the move
The majority of renters are still skeptical whether they can afford to buy a home.
Over half (58 percent) of nonhomeowners say they aren’t ready, but almost a third would be if faced with a drastic lifestyle change, says a study from the National Association of Realtors.
Renters say their main reason to invest in a home is a lifestyle change like marriage or children, which Realtors are banking on millennials to do this year, says the study.
“Housing demand in 2018 will be fueled by more millennials finally deciding to marry and have kids,” says NAR’s chief economist Lawrence Yun. “However, with prices and mortgage rates also expected to increase, affordability pressures will persist.”
Of course, affordability is less of a concern with multiple sources of income.
Marriage speeds up mortgage savings
Two incomes are better than one, especially when saving for a down payment on a home.
It takes a single homebuyer six years longer than a married couple to save for a 20 percent down payment on the average home in the U.S., says a study from Zillow.
It’ll be much easier and quicker for a married couple to save and move to their dream location. If you’re dead set on moving to San Jose, California — but you’re saving on your own — it could take you 30 years to afford the down payment. A married couple can pull that off in only six years.
And that accounts for plenty of other cities in the country. In Portland, Oregon, 73 percent of homes are affordable to couples, but only six percent are affordable to a single person.
“Single buyers typically have more limited budgets, which means they are likely competing for lower-priced homes that are in high demand,” says Zillow senior economist Aaron Terrazas. “Having two incomes allows buyers to compete in higher priced tiers where competition is not as stiff.
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Article last modified on March 6, 2018. Published by Debt.com, LLC . Mobile users may also access the AMP Version: The Most Millennial-Friendly Cities For Aspiring Homeowners - AMP.