Housing in America is so expensive that even millennial millionaires are searching for more budget-friendly places to live.
They “tend to prefer markets that are more affordable — often in suburbs or second-tier cities, where their dollar will carry them further,” states a new report by Coldwell Banker.
The Coldwell Banker Global Luxury program worked with wealth intelligence data and research firm WealthEngine to analyze the lifestyles of millennial millionaires, from wealth creation and property investments to spending trends. It defined millennial millionaires as those ages 23 to 37 with a net worth of more than $1 million.
But, of course, not all wealthy millennials want to compromise on where they buy. Those who are set on expensive locations are willing to make compromises on what they’re buying there: They’re open to buying fixer-uppers in desirable areas if they can’t afford new construction properties, Jade Mills, a Coldwell Banker Global Luxury Ambassador and Beverly Hills real-estate agent, said in the report.
“It used to be that West Hollywood was affordable,” she says. “But now that it has gone up in price, rather than not purchase at all, millennials are purchasing property that needs work as long as they are in the area that they want to be in.”
Real-estate prices have skyrocketed
A recent SuperMoney report looked at data from the US Federal Housing Agency and found that the median price of home sales has increased by 39% since the 1970s. That’s especially staggering considering income increases are lagging way behind — those between ages 25 and 34 have only seen a $29 income increase since 1974 when adjusted for inflation, according to the report.
Since 2000, home values have increased by as much as 40% in areas in California, Florida, and New York, according to Harvard Joint Center for Housing Studies. Those are all places where wealthy millennials tend to live.
One poignant example of wealthy millennials’ shifting real-estate habits can be seen in the San Francisco Bay Area, where the median $1 million home will get you less than 1,200 square feet of space and, as of July 2018, more than 60% of renters were living in rent-controlled units. The housing crisis is so dire that 60% of tech workers, who are amongst the city’s highest-paid residents, say they can’t afford to buy homes in San Francisco.
As a result, many millennials are fleeing the Bay area. The search for affordable housing is bringing them to cities like Boise, Idaho, which was crowned the best place to buy a home in 2018 by WalletHub. A Bloomberg article from 2018 highlighted Reno, Nevada, and Phoenix, Arizona, as other popular destinations for people who are finding themselves priced out of California.
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