With everyone curious as to what millennials are doing or not doing these days, we here at QuoteWizard wanted to see where millennials are buying, or not buying, houses. Many would assume the mound of debt millennials are under would keep them from owning homes. While there is some truth to that, we set out to find where millennial homeownership is on the rise. We looked at Census data to see which states have seen the biggest changes in millennial (under 35 years old) homeownership from 2013 to 2019. When comparing homeownership rates over the six-year period, we found that nearly half of all states saw some growth in millennial ownership, whereas the other half saw a decline. We wanted to dig in and see what is driving the growth in millennial homeownership in certain states.
Key findings:
- The 17 states with the largest increases in millennial homeownership are also states in the top half of most expensive median home values. Affordability isn’t driving under-35 homeownership.
- Eight of the top 10 states for millennial homeownership are in the top half in median home value compared to outstanding mortgage debt, indicating that millennial homeownership is driven by value investment versus affordability.
- Median home values increased by 27% from 2013 to 2019, while median income of people aged 25-34 only increased by 17%.
- Above-average income growth from 2013 to 2019 in states with higher rates of millennial homeownership is a common factor.
The obvious theory for growth in millennial homeownership was affordable housing. States that saw growth in millennial homeownership were states that had lower median house values. Affordability was not the case in states with growth in millennial homeownership. Of the top 25 growing states, 17 were in the top half of the U.S. median house value. Millennials in fact are purchasing houses in the higher median values.
The next theory we put to the test was looking to see if median income for millennials has increased enough for them to now afford homes. Analyzing Census income data in each state from 2013 to 2019, we did see some correlation between millennial homeownership and income growth. Top homeownership states like Vermont, Massachusetts, New Jersey and Washington all saw a 20% increase in median income. States that saw a decline in millennial homeownership also saw some of the highest median income growth. To put a nationwide perspective on it, there was a 17% median income growth from 2013 to 2019, but median home values increased by 27%. Income growth doesn’t appear to outpace home values as a reason for more millennial homeownership.
The biggest correlating factor we found to reflect millennial homeownership growth is a differential type of metric that signals quality of home investment. In 2019, Experian released a study on median home values and outstanding mortgage debts in each state. The key metric of the study was the “difference between median home value and outstanding mortgage balance.” Essentially, the resulting amount of median home value minus the average outstanding mortgage amount in each state. This differential of home value and mortgage balance in each state can be viewed as a value metric that shows a willingness to incur mortgage debt for a value investment in a home. The differential in home value and mortgage balance metric showed a strong correlation in the top growing states for millennial homeownership. Eight of the top 10 states for under-35 homeownership are in the top half in the difference of home value compared to mortgage balance. This would indicate that the significant growth in millennial homeownership some states are seeing is due in large part to a value investment in homes instead of affordability.
States like Oregon, Massachusetts and Washington are each strong examples of high growth in millennial homeownership accompanied by strong differential metrics of home value compared to mortgage balance. Conversely, states seeing a decline in millennial homeownership, like Mississippi, Kansas and Arkansas, are states with low differential metrics of home value compared to mortgage balance. These states are likely seeing declines in millennial homeownership because of low home values compared to mortgage balance differentials.
| Rank | State | 2013 Ownership % | 2019 Ownership % | Ownership % Change | Difference Home Value vs. Outstanding Mortgage Debt |
|---|---|---|---|---|---|
| 1 | Vermont | 7.9 | 9.5 | 20.3% | $63,359 |
| 2 | Oregon | 7.8 | 9.3 | 19.2% | $125,003 |
| 3 | Maine | 8.1 | 9.5 | 17.3% | $99,246 |
| 4 | Wyoming | 12.8 | 14.7 | 14.8% | $50,686 |
| 5 | Massachusetts | 7.6 | 8.7 | 14.5% | $156,178 |
| 6 | New Jersey | 6.7 | 7.6 | 13.4% | $89,711 |
| 7 | Washington | 9.7 | 10.8 | 11.3% | $130,119 |
| 8 | Tennessee | 10 | 11.1 | 11.0% | $13,720 |
| 9 | Pennsylvania | 9 | 9.9 | 10.0% | $31,142 |
| 10 | Florida | 6.7 | 7.3 | 9.0% | $49,677 |
| 11 | Hawaii | 5.8 | 6.3 | 8.6% | $273,037 |
| 12 | New York | 7.5 | 8.1 | 8.0% | $67,690 |
| 13 | Ohio | 10.1 | 10.9 | 7.9% | $19,661 |
| 14 | New Hampshire | 8.2 | 8.8 | 7.3% | $101,346 |
| 15 | Michigan | 10.4 | 11.1 | 6.7% | $22,033 |
| 16 | Rhode Island | 7.8 | 8.2 | 5.1% | $98,423 |
| 17 | Indiana | 11.8 | 12.4 | 5.1% | $28,133 |
| 18 | Alabama | 10.2 | 10.7 | 4.9% | -$7,002 |
| 19 | Colorado | 11.4 | 11.9 | 4.4% | $122,187 |
| 20 | North Carolina | 9.5 | 9.9 | 4.2% | $27,380 |
| 21 | Alaska | 12.3 | 12.7 | 3.3% | $102,833 |
| 22 | Idaho | 11.7 | 12 | 2.6% | $103,007 |
| 23 | South Carolina | 9.7 | 9.9 | 2.1% | $10,641 |
| 24 | Connecticut | 7.7 | 7.8 | 1.3% | $19,872 |
| 25 | Virginia | 9.6 | 9.7 | 1.0% | $21,803 |
| 26 | Missouri | 11.9 | 12 | 0.8% | $24,155 |
| 27 | Iowa | 13.2 | 13.3 | 0.8% | $15,006 |
| 28 | Wisconsin | 10.8 | 10.8 | 0.0% | $52,811 |
| 29 | Georgia | 9.9 | 9.8 | -1.0% | $18,414 |
| 30 | Kentucky | 11.1 | 10.9 | -1.8% | $21,915 |
| 31 | Nevada | 11 | 10.8 | -1.8% | $64,988 |
| 32 | Illinois | 10.3 | 10.1 | -1.9% | $7,075 |
| 33 | Maryland | 9.6 | 9.4 | -2.1% | $37,980 |
| 34 | Nebraska | 14 | 13.7 | -2.1% | $30,181 |
| 35 | South Dakota | 14.2 | 13.8 | -2.8% | $43,211 |
| 36 | New Mexico | 10 | 9.7 | -3.0% | $36,129 |
| 37 | West Virginia | 9.7 | 9.4 | -3.1% | -$11,464 |
| 38 | Oklahoma | 12.6 | 12.2 | -3.2% | -$9,411 |
| 39 | Texas | 11.3 | 10.9 | -3.5% | $21,976 |
| 40 | Mississippi | 10.1 | 9.7 | -4.0% | $8,093 |
| 41 | Kansas | 12.3 | 11.8 | -4.1% | $3,063 |
| 42 | Minnesota | 13.1 | 12.5 | -4.6% | $64,526 |
| 43 | Arizona | 10.1 | 9.6 | -5.0% | $54,641 |
| 44 | Arkansas | 11 | 10.4 | -5.5% | $117 |
| 45 | North Dakota | 16.4 | 15.5 | -5.5% | $47,226 |
| 46 | California | 8.1 | 7.6 | -6.2% | $186,909 |
| 47 | Montana | 10.7 | 10 | -6.5% | $61,389 |
| 48 | Utah | 16.3 | 15.2 | -6.7% | $134,887 |
| 49 | Louisiana | 12.2 | 11.2 | -8.2% | -$4,251 |
| 50 | Delaware | 9.8 | 8.9 | -9.2% | $50,773 |
References:
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