Millennials are on the move, reinvigorating urban centers, as tech companies spread their wings beyond Silicon Valley to more affordable markets, bringing young workers with them.
But not all housing markets are welcoming millennials with open arms — that is, when it comes to incomes and affordability.
Low supply and high demand are pushing prices higher everywhere, but the situation varies slightly city to city. No surprise, San Jose, California, and Seattle are the toughest housing markets for millennials, but some other surprising cities are high on a list compiled by Realtor.com. The real estate listing company ranked markets based on inventory availability and affordability.
Salt Lake City, Minneapolis and Omaha, Nebraska, rounded out the five toughest cities for millennials to become homeowners this spring. In all of the top five markets, millennials make up a higher share of the population and their incomes are higher than the U.S. median. They are thus more interested in buying homes, making those cities more competitive.
The inventory shortage is widespread, with the number of active listings this spring 8 percent lower compared with a year ago, while list prices are 8 percent higher. In the toughest cities, however, supply is nearly three times lower than in the rest of the nation. What is available is selling faster and bidding wars are pushing prices higher by about 14 percent.
In Minneapolis, the median list price is about the same as the national average, around $280,000, but with 17 Fortune 500 companies attracting young workers, and a new, booming bicycle culture, it is drawing millennials faster than it can house them. Millennials make up nearly 14 percent of the total population but account for nearly 26 percent of Realtor.com page views in the area.
"Despite the difficulties, first-timers are optimistic and more than willing to weather the challenges this spring has to offer," according to Realtor.com's chief economist, Danielle Hale.
Omaha is seeing similar numbers to Minneapolis, and it boasts some of the top school systems in the nation. Millennials looking to find homes under $250,000 are struggling, but boomers purchasing more expensive homes continue to have success making deals, according to the report.
Salt Lake City has a much higher median home price than the national average, but millennials now make up more than 15 percent of the total population. They are drawn to a strong economy which boasts Delta Air Lines and eBay as well as a thriving outdoor culture. Millennial salaries are only slightly higher than the national average, making it more difficult to find and afford to buy a home there.