Millennial Demand is Driving up Prices in Family-Friendly Neighborhoods

Millennial Demand is Driving up Prices in Family-Friendly Neighborhoods

With all the talk about rising home prices and housing shortages, I thought you might enjoy learning about one theory of the problem from Zillow.

  • Home values in ZIP codes with a higher share of children younger than 18 are growing faster than home values elsewhere in the same county, in large part due to demand from millennials looking for homes that meet the needs of their growing families. 
  • More millennials will reach the age of 32, the peak age for first-time home buyers, over the next two years than ever before.

Home values are growing fastest in areas with the highest share of children, reflecting the impact millennial house hunters are having on family-friendly neighborhoods with a shortage of homes for sale. A record number of millennials will reach key age milestones for buying homes over the next two years, which may accelerate price gains even further. 

The top 10% of ZIP codes with the largest share of children in each county analyzed saw an average of 21.3% growth from October 2020 to October 2021, compared to 17.6% in ZIP codes with the smallest share of kids. That trend started in 2013 – also the year the oldest millennials turned 32. That’s the median age of first-time home buyers and one year older than the median age of fathers with newborns.

As millennials go, so goes the housing market, and we are seeing now, as millennials age, that they are looking for homes that fit the needs of growing families. Millennial demand has helped push up home prices in areas with the most children. Competition for homes in these family-friendly areas should intensify in the coming years as more millennials reach the key age of 32, adding to the affordability squeeze.

Family-friendly neighborhoods will maintain these higher valuations for a generation as Millennials raise their children and advance in their careers. During this time, local municipalities can spread the wealth by adding family-friendly facilities such as parks, playgrounds and schools to ZIP codes that currently lack these amenities.

Amy Ginsburg

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