How Millennials Impact the Housing Market

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Wolf Richter wolfstreet.com, http://www.amazon.com/author/wolfrichter

Millennials are settling in urban centers. In many ZIP codes, they’re already the majority. And they spend their money on rent.

It’s tough being a millennial. Millennials are accused of killing entire industries: casual dining chains that should have been killed off by a prior generation, beer (sez Goldman Sachs), napkins, homeownership, Harley Davidson, banks, diamonds, and brick-and-mortar retailers. OK, things change. But there’s one thing the largest US generation ever is not killing off: urban centers. They’re flocking to them, in some case they’re gentrifying them – for better or worse – and they’re often paying sky-high rents.

For example, in downtown Los Angeles, the two adjacent ZIP codes 90014 and 90013 (which includes Skid Row) are being rapidly gentrified with a high-rise building boom. And the millennial population has soared over a five-year period, by 91% in ZIP code 90014 and by 60% in ZIP code 90013. These two ZIP codes have the fastest-growing population of millennials among any large ZIP codes in the 30 biggest US cities, according to a report and data by Yardi’s RentCafé.

The population data – based on the Census Bureau American Community Survey’s five-year population estimates – shows that ZIP codes in or near downtowns are sought out by millennials. In many of those ZIP codes, millennials are now the majority of the population.

The millennial population in Lower Manhattan ZIP code 10282, which includes Battery Park, jumped by 55% over the five-year span. But with an average rent of $5,657 a month, it’s the most expensive ZIP code in the US, according to RentCafé. Wall Street pays well.

The table below shows the top 20 ZIP Codes in large cities that had the biggest percentage increase in the millennial population. The table also shows average rent by ZIP code where available. None of these ZIP codes are cheap, though some of them could be deemed reasonable, by New York City or San Francisco standards.

For this study, the areas are divided into three categories:

“Downtown” (DT): an area locally known as “downtown,” “city center,” or “central business district.”
“Near downtown” (nDT): within 3 miles of downtown.
“Neighborhood” (NH)

In the table, “M-pop” isn’t a kind of music, the “millennial population” in that ZIP code.

#	ZIP	City	Area	Type	M-Pop	Rise	Avg. Rent
1	90014	Los Angeles, CA	Downtown	DT	3,300	91%	$2,531
2	90013	Los Angeles, CA	Downtown / Skid Row	DT	4,700	60%	$2,257
3	10282	New York, NY	Lower Manhattan	DT	2,300	55%	$5,657
4	97232	Portland, OR	Kerns / Laurelhurst	nDT	5,700	52%	$1,637
5	10069	New York, NY	Uptown Manhattan	NH	2,200	48%	$4,191
6	32204	Jacksonville, FL	Springfield	nDT	3,000	45%	$1,444
7	90048	Los Angeles, CA	Mid-Wilshire	NH	10,300	39%	$4,391
8	19125	Philadelphia, PA	Kensington	nDT	11,200	37%	N/A
9	94114	San Francisco, CA	Castro	nDT	12,500	37%	N/A
10	20024	Washington, DC	Southwest Waterfront	nDT	5,100	37%	$2,250
11	89113	Las Vegas, NV	Sovana	NH	9,600	37%	$1,335
12	80206	Denver, CO	Congress Park	nDT	10,700	37%	$2,435
13	98101	Seattle, WA	Downtown	DT	5,500	36%	$2,816
14	94131	San Francisco, CA	Glen Park	NH	9,000	36%	N/A
15	80209	Denver, CO	Washington Park	NH	10,000	35%	$2,151
16	80224	Denver, CO	Virginia Village	NH	5,800	34%	N/A
17	78756	Austin, TX	Brentwood	NH	4,000	34%	$1,271
18	80237	Denver, CO	Hampden South	NH	7,000	33%	$1,628
19	92116	San Diego, CA	North Park	NH	15,000	33%	N/A
20	19123	Philadelphia, PA	Kensington	nDT	7,300	33%	$1,657

Note that Denver has four ZIP codes in this list; Los Angeles has three on this list; New York, San Francisco, and Philadelphia two each. Also note the average rents by ZIP code, in the right column (where available). Some millennials at least are making nice amounts of money – and they’re spending it too – on rent!

For the purpose of this report, millennials were born between 1977-1996. RentCafé eliminated ZIP codes that overlapped with University Campuses and US Military Bases or that contained penitentiaries and correctional facilities. The names of the neighborhoods and their ZIP codes are from the US Post Office and are approximate.

Another way of looking at where the millennials are clustering together is by ZIP code with the largest proportion of millennials – and these are not the ZIP codes with the biggest percentage increases, as seen above.

Below is a table of the 20 ZIP codes where millennials dominate in number — ranging from 60% to 73% of the total population in that ZIP code. At the top is the “consecrated millennial hub,” as the report calls it: Chicago’s West Loop in ZIP code 60661, where 73% of the residents are millennials. The area, which sports a building boom of apartment buildings, is adjacent to the central business district, “the Loop.”

In second place is 19127 in Philadelphia, where 71% of the residents are millennials. The neighborhood, Manayunk, runs along the Schuylkill River and is known, as RentCafé puts it, “for its flourishing small businesses, wide range of leisure activities and dining choices.”

In third place is 10005 in Lower Manhattan, where millennials make up 71% of the population. This is the Financial District and includes Wall St., the actual street.

You’ll also find Oklahoma City’s central business district on this list, along with the Arts District in Dallas, the Astrodome area in Houston, etc. In other words, there are concentrations of millennials in major cities spread across the country. All except for two are either downtown or near downtown.

#	ZIP	City	Area	Type	Share	M-Pop	Avg Rent
1	60661	Chicago, IL	West Loop	DT	73%	6,800	$2,195
2	19127	Philadelphia, PA	Manayunk	NH	71%	4,500	$1,876
3	10005	New York, NY	Wall Street	DT	71%	6,200	$3,579
4	02113	Boston, MA	North End	DT	70%	5,200	N/A
5	20036	Washington, DC	Dupont Circle	DT	69%	3,900	$2,449
6	80203	Denver, CO	Capitol Hill	DT	66%	13,500	$1,691
7	10006	New York, NY	Wall Street	DT	66%	2,200	$3,422
8	75201	Dallas, TX	Arts District	DT	65%	8,800	$2,050
9	10018	New York, NY	Midtown West	nDT	64%	6,200	$4,299
10	94158	San Francisco, CA	Mission Bay	nDT	63%	3,800	$4,336
11	73102	Oklahoma City, OK	Business District	nDT	63%	3,300	$1,223
12	77054	Houston, TX	Astrodome	NH	63%	14,400	$1,167
13	43215	Columbus, OH	Downtown	DT	62%	8,600	$1,327
14	28202	Charlotte, NC	Fourth Ward/Uptown	DT	62%	7,400	$1,782
15	75202	Dallas, TX	Downtown	DT	61%	1,400	$1,702
16	78751	Austin, TX	Hyde Park	nDT	61%	8,900	$1,504
17	60654	Chicago, IL	River North	DT	61%	10,500	$2,619
18	60642	Chicago, IL	Goose Island	nDT	60%	11,700	$2,342
19	19102	Philadelphia, PA	Center City West	DT	60%	2,900	$2,120
20	46204	Indianapolis, IN	Near North	DT	60%	4,200	$1,403

And finally, the 20 ZIP codes with the largest millennial population in absolute terms. Some of these ZIP codes are very large, and while there are many millennials on those ZIP codes, the percentage of millennials compared to the total population may not be that large.

At the top is 11211 in Brooklyn, where the average rent of $3,200 a month is an outright steal compared to Battery Park in Lower Manhattan (#3 in the first table, $5,657). Nine out of these 20 ZIP codes are in New York City, but none are in Manhattan.

Chicago has six zip codes on this list; Los Angeles only one. You’ll also find El Paso, TX, on it, and at the bottom, San Francisco’s Inner Mission.

#	ZIP	City	Area	Type	M-Pop	Avg Rent
1	11211	Brooklyn, NY	Williamsburg	nDT	43,700	$3,247
2	60657	Chicago, IL	Lakeview	NH	41,500	$1,657
3	11368	Queens, NY	Corona	NH	40,700	$1,919
4	60647	Chicago, IL	Logan Square	NH	40,600	$1,920
5	60618	Chicago, IL	Irving Park	NH	37,100	$1,201
6	60614	Chicago, IL	Lincoln Park	NH	36,300	$1,787
7	60629	Chicago, IL	Chicago Lawn	NH	35,700	$1,900
8	11220	Brooklyn, NY	Sunset Park	NH	34,800	N/A
9	11385	Queens, NY	Glendale	NH	34,700	N/A
10	90011	Los Angeles, CA	Southeast LA	nDT	33,500	N/A
11	11226	Brooklyn, NY	Flatbush	NH	33,300	$2,202
12	79936	El Paso, TX	East Side	NH	33,300	$846
13	77084	Houston, TX	Addicks	NH	32,600	$1,064
14	11206	Brooklyn, NY	Williamsburg	nDT	32,000	$2,783
15	11221	Brooklyn, NY	Bushwick	NH	31,800	N/A
16	11373	Queens, NY	Elmhurst	NH	31,600	$1,921
17	60608	Chicago, IL	Pilsen	nDT	31,400	$926
18	60625	Chicago, IL	Lincoln Square	NH	31,200	$1,144
19	11377	Queens, NY	Woodside	NH	31,000	$1,856
20	94110	San Francisco, CA	Inner Mission	nDT	30,500	N/A

Millennials, because of their very large number, are going to shuffle things around a little, much like the baby boomers did when they arrived in the workforce and the housing market. And the housing market has been greeting them as a large opportunity.

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