Consumers under the age of thirty years with at least bachelors’ degree are often referred as the millennials. They are considered to be the most educated generation. They are better informed about their housing options and are already influencing the real estate markets and trends in the US. Real estate analysts and experts have identified the metro areas with the lowest rates and fastest rates of growth. The analysts used the data from the U.S Census Bureau. In the year 2015, the regions that have seen the strongest economic growth and real estate appreciation were the metros with the fastest rates of educated millennials’ growth and economic growth. Appreciation in the real estate of these regions highlights the real power of then millennials.
Metros with the highest growth rate of the educated millennials
The highest rates of population growth were reported in metro cities of the West, Southwest, and Southeastern regions. With a 7.6% population increase in 2015 from the year prior, Nashville ranked first in the college-educated millennials’ growth. Austin, Orlando, Seattle, and Denver followed closely behind Nashville in terms of educated population’s growth.
Reasons for enhanced growth of the millennials
There are many reasons for increase in the number of educated millennials in various metros of the US. These include well-performing job markets and entrepreneurial opportunities. In addition to this, thriving arts and cultural scenes, and high rank in various quality of life measures are some of the reasons behind the increase in the number of educated millennials over the years.
New York City, San Francisco, and Los Angeles have higher rents than the places which saw an increase in the number of educated millennials. In addition to this, these metros have created a virtuous cycle of job growth for attracting further young talent, by orienting their economies towards technology and professional service-oriented fields. Rise in the number of educated youths in these regions has helped in boosting the sales and rents of various real estate properties such as an apartment, single-family, office, and retail markets.
2015 One-Year Population Change
Cities with declining manufacturing and less prosperous trade hubs, which are located in the rust belt and the Midwest, are considered to be the lowest performing metros in terms of real estate appreciation. As these metros don’t provide the same economic opportunities or quality of life as compared to other metros, these cities have the lowest economic growth and as well as those of the educated youth. The least performing metros don’t offer reasonable incentives for the educated youth to move to these areas as these areas are marked by harsher climate conditions and industrial diversifications.
In 2015 annual growth and five-year growth plans, some of the metros like Kansas city, Cleveland and Chicago were ranked in the bottom ten. Low economic growth suggests that the long-term challenges for these areas are still not addressed.
Atlanta, Phoenix Sacramento, and Las Vegas are ranked in the bottom ten over the past five year period. Due to the improvement in their ability to attract young and college-educated workers, the economic growth of these cities has improved considerably in the year 2015.
Raleigh-Durham: A curious and unexpected outlier
This metro has several top-tier universities, which make it one of the best metros for education in the US. In addition to this, it has a growing biotech sector of the local economy. But, it ranks among the bottom ten on both the lists. It is important for such metros to simply retain their college graduates to enhance the economic growth, rather than pulling the educated millennials from elsewhere and displaying strong growth.
2010-2015 Annual Average Population Change
The report of best and worst performing metros in terms of economic growth and educated millennials may serve as a predictor of economic winners and losers in the decades to come.
It is important to understand that a growing millennial population in these metros will stimulate demand for office and retail space. In addition to this, the demand of single- and multifamily homes will also increase due to increase in the number of educated youths. Increase in the demand of commercial as well as industrial properties serves as an underpinning for the appreciation of the value of real estate.