If the millennial generation is the future of a sustained real estate recovery, those local markets that are actually most affordable while still being attractive to this generation are likely where the most unimpeded housing growth will occur.
Markets in the southeast and Midwest dominated the list of the Top 15 most affordable housing markets for millennials to buy, according to a RealtyTrac analysis (see full methodology below). Two counties in Georgia made the list, led by Richmond County in the Augusta-Richmond County metro area at No. 1. Despite a below-national-average estimated median income of $37,561 in Richmond County, a relatively low median home price of just $64,100 translated into less than 11 percent of median income spent on a house payment for a median priced home. Other states with two counties making the list of most affordable for buying were Maryland, North Carolina, Nebraska and Tennessee.
Topping the list of the most affordable markets to rent was Bossier Parish in the Shreveport, La., metro area, where an average fair market rent for a three-bedroom property runs below $1,000. Second was Arlington County, Va., a bit of a surprise given it is in the high-priced Washington, D.C., market, but making the cut thanks to the corresponding high incomes there. Other major markets represented in the most affordable to rent included Charlotte, N.C. (Mecklenburg County), and Minneapolis-St. Paul (Hennepin County).
Several counties were on both lists: Top 15 most affordable for buying, and Top 15 most affordable for renting. These counties included the Nebraska counties of Lancaster (in Lincoln) and Douglas (in Omaha), along with Franklin County, Ohio in the Columbus metro area, Rutherford County, Tenn., in the Nashville metro area, and Faulkner County, Ark., in the Little Rock metro area.
Although many of these counties may not be known as hot spots for hipsters, the most culturally definable segment of millennials, many of them are emerging as attractive to the demographic looking for a less expensive alternative to the high-priced hipster havens on the coasts. The millennial population increased 46 percent from 2007 to 2013 in Montgomery County, Tenn. (Clarksville), and was up more than 20 percent in markets like Mecklenburg County, N.C. (Charlotte), Durham County, N.C. , Hennepin County, Minn. (Minneapolis), Philadelphia County, Pa. and Franklin County, Ohio (Columbus) — a bigger increase during the same time period than Kings County, N.Y. (Brooklyn) and Los Angeles, County, Calif.
Millennials are in part attracted to many of these markets because of good job prospects. The average unemployment rate in the Top 15 counties that were most affordable to buy was 5.9 percent in April, and the average unemployment rate in the Top 15 counties most affordable to rent was an even lower 4.3 percent.
RealtyTrac analyzed the percentage of income needed by median income earners to purchase a median priced home or rent an average three-bedroom property in the 351 U.S. counties with a population of 100,000 or more to identify which were most affordable. To narrow the list down to only counties attractive to millennials, RealtyTrac only considered counties where millennials — defined as those born between 1977 and 1992 — made up at least 24 percent of the total population, and where the millennial population increased between 2007 and 2013.
After this filtering, RealtyTrac sorted the list by percentage of income spent on the housing payment — including mortgage, insurance, taxes and maintenance — and the percentage of income spent on the average rent for a 3-bedroom home as assigned the U.S. Department of Housing and Urban Development, and took the 15 counties with the lowest percentages in each sort to determine 15 Most Affordable Markets for Buying and 15 Most Affordable Markets for Renting.