Young people have always been more transient than older generations. That’s largely due to lifestyle since young people are more likely to change jobs more often and new jobs often mean relocation. They are also more likely to move when they marry. These differences in lifestyle often mean that migration rates are largely tied to generational gaps. A recent report published by Brookings confirms this.
How Often Millennials Migrate or Relocate
Prior to the Great Recession of 2007-2009, Millennials moved fairly often. However, migration rates have slowed since then. From 2004 to 2007, the annual inter-county migration rate for millennials was between 7.5% and 9%. It dropped to 6.2% to 7% between 2007 and 2012. From 2012 to 2017, the annual inter-county migration rate for millennials fluctuated between 6.5% and 7.1%, slightly higher than the previous five years but considerably lower than pre-recession.
One of the factors Brookings Senior Fellow William H. Frey believes drives migration rates for millennials is the fact that they tend to delay marriage and major life decisions such as childbearing and buying a home.
Migration rates aside, millennials are beginning to enter the home buying market now, so this may lead to more migration as more young people become homeowners. But looking at the current data, where does Brookings say millennials are migrating to and from?
Millennial Migration Patterns
Frey identified seven metropolitan areas that experienced net millennial migration gains of 7,000 or more from 2012 to 2017. Those metro areas include Houston, Dallas, and Austin, Texas; Denver, Colorado; Seattle, Washington; Portland, Oregon; and Charlotte, North Carolina. Two-fifths had college degrees in four of these areas.
Something else that is interesting is that 17 of the top 20 Sun Belt migration magnets for millennials are in the South and West regions of the country. And half of all U.S. states–18 of them in the Sun Belt–experienced net migration gains among millennials.
This migration pattern is slightly different from the preceding five-year period when Washington, D.C. instead of Dallas, Texas was in the top five metro areas. Still, each of the metro areas grew as a migration destination for Millennials from the previous period to the later period. Some of that growth was quite significant. For instance, Houston, Texas had annual net migration among millennials of 9,981 from 2007 to 2012 and 14,467 annual net migration from 2012 to 2017.
Net migration losses among the bottom five metro areas were much larger than the net gains among the top five metro areas. Los Angeles lost over 50,000 Millennials from 2004-2007. New York City lost 20,608 and 37,648 from 2007 to 2012 and 2012 to 2017, respectively. Both New York and Los Angeles, as well as Chicago, were among the top five losers during all three periods.
Frey points out that Millennials preferred suburban areas and the Southwest prior to the recession. That’s why Riverside, California and Phoenix, Arizona were the top two metro areas for Millennial migration from 2004 to 2007. Houston, Texas is the only metro area in the top five net gainer category during all three migration periods.
What Does This Say About Real Estate Investing?
Since Millennials have put off homebuying, it’s safe to say that if real estate investors want to focus on this market, then rentals and starter homes are the best places to look. However, as they grow their families and have more children, larger homes will become the trend. There’s no reason not to expect the same trend with real estate crowdfunding investments, but you should perform your own due diligence on any type of real estate investment.