A new report from Trulia counts down the 10 U.S. cities losing Millennials because of impossible-to-afford rents and home prices. While young people and college graduates have been flooding into urban settings like Austin, New York City, Los Angeles, and Chicago for a decade now, many believe that trend is finally reversing.
With wages flat, young people simply can’t afford to pay $1,500 per month in rent, nor put up a down payment of $20,000.
There aren’t many surprises on the Millennial Migration list; most of the cities seen recently in headlines about sky-high living costs make an appearance. Trulia data scientist Mark Uh analyzed three primary metrics: the percentage of homeowners who are Millennials, the share of households moving away that are Millennials, and the moving rate for young people relative to the average moving rate.
San Francisco was number 10 on the list of cities losing young people because of too-expensive home prices. San Francisco has always been an attractive city for young people, and today Millennials head 27.4% of households in the city. Yet young people make up more than half of the people moving away at 52.3%, and the city’s Millennial population had a move-away rate 91.1% above the average.
Washington, D.C., was sixth on the list with a move-away rate 102.7% above the norm, while New York City had a move-away rate of 106.4%.
While owning a home was once part of the American Dream, the Great Recession has changed many people’s opinions on homeownership for good. Today, homeowners can expect to pay 5% of their home’s value on even simple projects like a kitchen remodel, which can average $17,000 to $37,000. Similarly, in an era of record college loan debt, it’s becoming harder for many young people to justify buying a home in the first place.
LifeHacker recently tackled the rent-versus-mortgage debate and concluded the entire argument is absurd.
“Even as a homeowner, I still think renting is underrated,” wrote LifeHacker’s Kristin Wong. “That doesn’t mean buying is a bad decision. The rent vs. buy debate is just silly overall. It ignores the enormous grey area that exists between the two options.”
Wong argues that neither renting nor homeownership is a positive or negative financial decision on its own, but ultimately depends on an individual’s lot in life. While that may seem obvious, that hasn’t stopped the online content industry from flooding the Web with think pieces like “Why Homeownership is Evil” or “Renting is the Smartest Decision You’ll Make This Year.”
Even though home prices are on the rise at the moment, in the wake of the housing bubble, many economic advisors no longer think that buying a home is a prudent investment.
Wong added, “Experts agree that buying is a bad investment, but the problem is, many misinterpret this to mean buying a home is a bad idea in general. Just because your home isn’t a great investment doesn’t necessarily make it a bad purchase.”
Visit Trulia to see the rest of the list.
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