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How Millennials are Changing the Housing Market

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In the next five years, a whopping 66.1% of millennials are expecting to buy homes.

That kind of demand from the largest generation in American history certainly doesn’t go unnoticed – and it’s enough that it will help to shape the direction of the real estate industry itself.

Thinking Different

Each generation is different, so it’s no surprise that millennials have their own set of unique attitudes towards home buying.

Today’s infographic from Nationwide Mortgages takes a look at some of these differentiating factors, and provides some insight into how these preferences will create the drivers that ultimately affect the market as a whole.

How Millennials are Changing the Housing Market

It’s clear millennials are approaching the housing market in their own way that makes them unique from past generations. But what is it specifically that differentiates millennials in their attitudes and behaviors towards real estate?

Why Millennials Are Unique

As a group that grew up in the iPhone era, it’s obvious to say that millennials prefer to approach home buying in a more digital fashion, but they actually have other differences with Gen X and the Boomers that go much deeper.

To start, millennials much prefer to trust real estate agents than other generations. Only 8% of millennials did not use a realtor for their home purchases, while 13% of younger Boomers and 15% of older Boomers could say the same. Whether this is because of a lack of experience in the market, or because different attitudes towards agents, it’s hard to say.

Next, millennials associate buying a house with the American Dream at a higher rate (65.3%) than other groups. They do so even more than the Silent Generation (63.9%) – the group that grew up during World War II, and reaped the benefits of the post-war economic and housing booms.

Lastly, there are some other areas where millennials just have different preferences and attitudes towards owning a home. For example, they are less likely to define homeownership as permanent (11%), and consider their purchase only as a stepping stone towards the house they want (68% for millennials vs. 36% for all buyers). On top of that, they want very specific features in any home they buy – including things like new appliances, energy efficiency, big kitchens, home office space, proximity to work, and new technology in their homes.

Though some of the things that millennials want are treasured by other generations as well, millennials are having an impact on the industry just by the nature of their growing influence on the market. And for anyone that’s selling a house or making investments in real estate, this is a factor that should be taken into account.

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Ranked: 15 of the World’s Least Affordable Housing Markets

This map examines middle-income housing market affordability across eight major countries, highlighting some of the least affordable cities.

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Mapping housing market affordability and some of the least affordable cities

Ranked: 15 of the World’s Least Affordable Housing Markets

When considering where to live, big cities are attractive to people for a number of reasons, but affordability is usually not one of them.

This map, using data from Demographia, highlights the major cities ranked the worst for housing market affordability on a global basis.

Unaffordable Housing Markets

Demographiaโ€™s report looks at middle-income housing affordability in 94 cities in eight countries, many of which are known for having pricy housing markets:

  • ๐Ÿ‡ฆ๐Ÿ‡บ Australia
  • ๐Ÿ‡จ๐Ÿ‡ฆ Canada
  • ๐Ÿ‡จ๐Ÿ‡ณ China (Hong Kong)
  • ๐Ÿ‡ฎ๐Ÿ‡ช Ireland
  • ๐Ÿ‡ณ๐Ÿ‡ฟ New Zealand
  • ๐Ÿ‡ธ๐Ÿ‡ฌ Singapore
  • ๐Ÿ‡ฌ๐Ÿ‡ง United Kingdom
  • ๐Ÿ‡บ๐Ÿ‡ธ United States

For the 2023 report, it uses 2022 Q3 prices and income levels for evaluation, dividing the median house price by the gross median household income to find the median multiple for housing.

And for the first time in the history of Demographiaโ€™s reporting, not a single of the 94 cities scored below 3.0, the cutoff to be deemed โ€œaffordable.โ€ Hereโ€™s a closer look at the least affordable markets in 2023:

RankCityHousing Median Multiple
1๐Ÿ‡ญ๐Ÿ‡ฐ Hong Kong18.8
2๐Ÿ‡ฆ๐Ÿ‡บ Sydney13.3
3๐Ÿ‡จ๐Ÿ‡ฆ Vancouver12.0
4๐Ÿ‡บ๐Ÿ‡ธ Honolulu11.8
5๐Ÿ‡บ๐Ÿ‡ธ San Jose11.5
6๐Ÿ‡บ๐Ÿ‡ธ Los Angeles11.3
7๐Ÿ‡ณ๐Ÿ‡ฟ Auckland10.8
8๐Ÿ‡บ๐Ÿ‡ธ San Francisco10.7
9๐Ÿ‡ฆ๐Ÿ‡บ Melbourne9.9
10๐Ÿ‡จ๐Ÿ‡ฆ Toronto9.5
11๐Ÿ‡บ๐Ÿ‡ธ San Diego9.4
12๐Ÿ‡ฌ๐Ÿ‡ง London8.7
13๐Ÿ‡บ๐Ÿ‡ธ Miami8.5
14๐Ÿ‡ฆ๐Ÿ‡บ Adelaide8.2
15๐Ÿ‡ฌ๐Ÿ‡ง Bournemouth & Dorset8.0

For well over a decade now, Hong Kong has taken the top spot as the least affordable market globally. The only city to become even less affordable year over year was Los Angeles.

On the flip side, the most affordable city in the U.S. was Pittsburgh, with the median multiple sitting at 3.1. As people start to get priced out of certain markets, they may start to move to these more affordable cities.

Zooming out farther, here are the housing market affordability scores for all eight jurisdictions covered in this report:

Country / JurisdictionHousing Median Multiple
๐Ÿ‡ญ๐Ÿ‡ฐ Hong Kong18.8
๐Ÿ‡ณ๐Ÿ‡ฟ New Zealand10.8
๐Ÿ‡ฆ๐Ÿ‡บ Australia8.2
๐Ÿ‡จ๐Ÿ‡ฆ Canada5.3
๐Ÿ‡ธ๐Ÿ‡ฌ Singapore5.3
๐Ÿ‡ฌ๐Ÿ‡ง UK5.3
๐Ÿ‡ฎ๐Ÿ‡ช Ireland5.1
๐Ÿ‡บ๐Ÿ‡ธ U.S.5.0

Again, none of these countries are considered affordable, but within each there is a wide range of scores. Hong Kong is significantly less affordable than the second-place New Zealand and third-place Australia.

Scores across Canada, Singapore, the UK, Ireland and the U.S., however, are quite similar.

Better Cities for Housing Market Affordability

While many people flock to big cities, evidenced by the fact that many of the least affordable places are also among the most populous, others are opting to live somewhere more in their price range.

Hereโ€™s a glance at some of the most affordable housing markets worldwide:

RankCityHousing Median Multiple
1๐Ÿ‡บ๐Ÿ‡ธ Pittsburgh, PA3.1
2๐Ÿ‡บ๐Ÿ‡ธ Rochester, NY3.2
3๐Ÿ‡บ๐Ÿ‡ธ Cleveland, OH3.5
3๐Ÿ‡บ๐Ÿ‡ธ St. Louis, MO-IL3.5
5๐Ÿ‡บ๐Ÿ‡ธ Cincinnati, OH-KY-IN3.6
5๐Ÿ‡บ๐Ÿ‡ธ Oklahoma City, OK3.6
7๐Ÿ‡บ๐Ÿ‡ธ Buffalo, NY3.7
8๐Ÿ‡บ๐Ÿ‡ธ Detroit, MI3.8
9๐Ÿ‡บ๐Ÿ‡ธ Louisville, KY-IN3.9
9๐Ÿ‡บ๐Ÿ‡ธ Tusla, OK3.9
11๐Ÿ‡จ๐Ÿ‡ฆ Edmonton, AB4.0
11๐Ÿ‡บ๐Ÿ‡ธ Hartford, CT4.0
11๐Ÿ‡บ๐Ÿ‡ธ Kansas City, MO-KS4.0
14๐Ÿ‡บ๐Ÿ‡ธ Columbus, OH4.1
14๐Ÿ‡บ๐Ÿ‡ธ Grand Rapid, MI4.1
14๐Ÿ‡บ๐Ÿ‡ธ Indianapolis, IN4.1
14๐Ÿ‡บ๐Ÿ‡ธ Minneapolis-St. Paul, MN-WI4.1
14๐Ÿ‡บ๐Ÿ‡ธ Philadelphia, PA-NJ-DE-MD4.1

All of the top 18 most affordable cities covered in the report are located in North America.

While big, global cities will certainly continue to attract talent and residents from all over, the more affordable cities may gain new residents for more practical financial reasons.

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