Millennials have been deemed the most unpredictable generation in regards to real estate purchases. And though this generation of twenty-somethings to early thirty-somethings are expected to surpass Baby Boomers and Gen X, becoming America’s number one home buyers, they just haven't yet... leading economists, Realtors, developers, etc. trying to crack the code of what they want and how to reach them.
So why the mystery? First, we have to look at the history that has shaped the way this generation thinks and feels about housing. Here is what we know: a large portion of Millennials experienced the Great Recession under the roofs of mom and dad. They saw what was happening to their parents, or perhaps just saw the fear of what may happen to their parents....and their homes. You could even say that because of the lack of jobs, they lived with mom and dad longer than their predecessors. Fast forward to today, and these same Millennials are beginning to land good jobs and are experiencing an improving economy, allowing them to maybe think about buying a home, albeit cautiously.
But the shortage of Millennial homebuyers can’t just be blamed on the lack of jobs due to the recession, especially in San Antonio where it really didn’t hit quite as hard as it did in other areas of the US. Even here in the Alamo City, where real estate is particularly affordable and the job market is pretty solid, one of the biggest reasons young people aren’t buying houses is because most of them simply don’t have enough money saved up to clear the hurdle of a down payment.
In February 2016, the median price of a home in San Antonio was around $190,400, which would require saving up nearly $19,400- if you are only putting 10% down. (Depending on the bank or lender, you may be required to put as little as 3% down or as much as 20% down.) Combine this savings burden with the fact that these often fresh-out-of college youngsters have college tuition debt AND rent they pay each month and you can get a good idea of why they have a hard time coming up with this necessary chunk of money. However, even with down payment issues and debt considered, we also have to look at what exactly these young adults are looking for in a home. Sure, many of them would like to be homeowners, but aside from the fact that they may be scared of foreclosure or don’t have the funds to put down, they often times are apt to seek housing in city centers, which comes at a hefty price.
A little over a year ago a multitude of surveys revealed that Millennials are heading to the cities in droves, with NPR declaring that “This may be the most ‘bright lights, big city’ generation in history”. Why? Millennials like having the world at their fingertips. With the resurgence of downtown areas as centers of economic energy and vitality, a majority are opting to live in urban areas over suburbs or rural communities. Case in point, sixty-two percent of Millennials have indicated that they would prefer to live in mixed-use communities commonly found in urban centers. It is in these places that they can be close to shops, restaurants, offices and the hip vibe that this generation thrives on. Because of this desire, Millennials are currently flocking to these urban areas at a higher rate than any other generation, with 40 percent saying they would like to live in an urban area in the future. As a result, for the first time since the 1920s, growth in these urban areas outpaces growth of areas outside of them.
Yes, urban living has become a HUGE draw to this generation, and as a result city centers and urban areas are being redeveloped and have become quite the hot spots. Speaking in terms of real estate, hot spots also mean higher house prices. Unfortunately, even with the good jobs that these Millennials are landing, the prices of these coveted homes are simply out of their price range; supply and demand, folks.
In many in-demand cities across the US, homes that Millennials can afford to buy aren’t really where they are wanting to live. In New York City, for instance, the median price of a home is listed at about half a million dollars, which isn't exactly affordable, but assuming it was, that half a mil won’t buy very much. In that price range many of the offerings are tiny studios and one bedrooms. Larger spaces in that same price range, the type people buy when thinking about starting a family or offering guests something nicer than a couch to sleep on, are much further away from city centers, requiring long, multi-vehicle commutes or buying a car. And while we know that NYC is one of the most expensive places to live, the same can be said of cities across the country. Needless to say, Millennials have been priced out of some of the biggest U.S. cities, with residential real estate prices rising even as wage growth remains slow or non-existent. The result? Renting in these in-demand areas.
Fortunately, San Antonio has been historically affordable which certainly lends itself to Millennial housing affordability. In fact, Bloomberg used data from the U.S. Census Bureau, Zillow, and Bankrate.com to quantify how much more money Millennials would need to earn each year to afford a home in the largest U.S. cities. The bad news is that the areas that often most appeal to young adults are also the ones where homeownership is the most out of reach (think New York, LA, Austin, etc.) The good news is that San Antonio as a whole is within the top 25 most affordable cities, where median Millennial earnings hover around $32k/ year, the minimum salary required to purchase a home is right around $40k, and the median home costs only $190,400. Compare that to the most unaffordable area, San Jose, CA, where Millennials make $53k a year but need to make over $133k a year to buy a home- yikes!
But what can you get in those Millennial hot spots for a “millennial price”? Let’s take a look at what San Antonio has to offer.
Located in Highland Park neighborhood, just east of downtown, this three bedroom, two full bathroom home boasts of 1,300 square feet. Priced at just under $90,000, a Millennial (or anyone) could make around $40,000 a year and be able to afford this home. Though not right downtown,
While a single Millennial may not be able to afford this home, two certainly could. Located in artistic/historic area of the city, Beacon Hill, this home, priced at $175,000 is walking distance to shopping, restaurants and schools. Beautifully renovated with new double pane windows, cabinetry in kitchen, granite countertops, and stainless steel appliances, it presents the best of modern living while complimenting its 1948 style. Metal ceilings, glass inlaid backsplash, and built in study/desk space in kitchen are just some of the items this home boasts!
Located near Blanco and W. Hildebrand, this wonderful 3 bed 2 bath home was built in late 1920s. Recently remodeled to give it a more modern feel throughout, the plethora of windows provide great natural light. With abundant space in the backyard and a covered attached awning, this home makes a great place for entertaining indoors and out.
This lovely remodeled home, located in the highly desired Woodlawn Lake area, has been updated with tile and wood floors, fresh paint, ceiling fans, and a/c. With a backyard that feels like a park, a convenient location for easy access to IH-10, and local shopping nearby, this classic home is a gem.
Want to see more homes in the downtown San Antonio area? Browse all the homes on the market!