Where Are Millennials Moving? The Answer May Surprise You

Young Couple Moving In To New Home Together

It’s no secret that young people are getting married and starting families later in life than their parents did. It is, however, a bit of a secret where they are choosing to settle down.

Big cities and their big employers have always attracted young workers, and that’s still true. But a combination of factors—sky-high home prices chief among them—have sent millennials across the country looking for alternatives. Unlikely places like Ohio and North Dakota have benefitted.

The Millennial Effect on the Market

Older millennials (aged 25 to 34) make up 13.6% of the US population but 30% of the current population of existing-home buyers, according to Realtor.com. Where they move matters to the real estate market.

Ellie Mae, a mortgage data firm, has a Millennial Tracker that highlights which towns have high percentages of mortgages closed by millennials. That data, in turn, can help future homebuyers and real estate professionals alike identify new, accessible housing markets.

Top 11 Cities for Millennial Home Buyers

In six US cities, millennials actually make up more than half of home buyers. Some of these places are so small they aren’t even served by an interstate highway. Here are the top 11 cities that millennials are moving to, according to Ellie Mae.

  1. Athens, Ohio: 59%

A little more than an hour away from Columbus, Athens is home to Ohio University—which helps explain why it’s among the most millennial-dense counties in the state.

  1. Aberdeen, South Dakota: 56%

Aberdeen is a three-hour drive away from the nearest large cities: Sioux Falls to the south and Fargo to the north. Aberdeen is home to Northern State University, and Ag Processing just opened a new soybean plant there.

  1. Williston, North Dakota: 55%

Williston’s population grew from 12,000 in 2007 to over 30,000 today, but unemployment there is well below the national average, and the household median income is more than $83,000. North Dakota boom towns are threatened by stubbornly low oil prices, however, which reduces demand for shale oil.

  1. Lima, Ohio: 55%

Lima hosts both the University of Northwest Ohio and an Ohio State University branch. The town brags that it’s a good place for large commercial development (it attracted 10 such projects in 2015), ranking sixth among small metropolitan areas, according to Site Selection magazine.

  1. Dickinson, North Dakota: 54%

Dickinson was actually the poster child for North Dakota’s oil boom and bust. As one example of the area’s frenetic rise, Dunn County, just north of Dickinson, saw its road construction budget jump from $1.5 million to $25 million in three years. Single family housing construction permits jumped 330% in one year.

  1. Odessa, Texas: 51%

Odessa, Texas, is also an oil town, located in the oil-rich West Texas Permian Basin. The oil bust hurt Odessa, too: it lost 12,200 jobs or about 15% of its employment when oil prices fell. More recently, though, the run-up in prices added 53,000 jobs and the economy is in recovery.

  1. Quincy, Illinois: 49%

Located directly across the Mississippi River from Mark Twain’s Hannibal, Missouri, Quincy has thrived thanks to smart planning dating back to the 1980s, when the city built a successful industrial park to attract employers. With its low unemployment and high graduation rates, Quincy made the Forbes list of top 15 small places to raise a family in 2010.

  1. El Paso, Texas: 49%

El Paso’s economy is boosted by a heavy presence of federal government employees. The US Citizenship and Immigration Services, the Drug Enforcement Agency, and the US Customs and Border Protection all have operations there, and Fort Bliss is nearby.

  1. Oshkosh-Neenah, Wisconsin: 49%

Many Americans know this town, about an hour from Green Bay, as the home of OshKosh B’gosh.  Military contracts also fuel the local economy. Oshkosh Defense, formerly Oshkosh Truck, builds specialty heavy rigs for government agencies, especially the military. The firm recently won a $6.7 billion contract to build a new Joint Light Tactical Vehicle for the US Army. Oshkosh is also home to the University of Wisconsin–Oshkosh, the third largest university in the state, with 14,000 students.

  1. Pottsville, Pennsylvania: 48%

An hour outside Harrisburg, Pottsville is home to Yuengling, now the largest locally owned brewery in America. Like many rural Pennsylvania towns, Pottsville is struggling and slowly losing population—it’s down from almost 17,000 in 1990 to just under 14,000 now, but with young buyers taking up residence here, that could change in the near future.

  1. Owensboro, Kentucky: 48%

Nestled along the banks of the Ohio River, Owensboro doesn’t have an interstate highway, but it is within a few hours’ drive of Louisville, Nashville, and St. Louis. The town counts US Bank among its largest employers—the firm’s national mortgaging service center is located there. A downtown makeover has also made this river city a nice place to live and work.

Why Millennials Are Moving

Understanding where millennials are buying homes is important both to the housing industry and to young people looking for alternatives to oppressive monthly mortgage payments.

“As millennials continue to enter the housing market, we are seeing great activity in the middle of the US, where inventory is generally more affordable than on the coasts,” says Joe Tyrrell, executive vice president of corporate strategy for Ellie Mae.

Tyrrell offered the example of top city for millennial homebuyers—Athens, Ohio. The the average home loan in Athens was nearly one-third the average home loan in Boston, Massachusetts.

Using the traditional 30%-of-income affordability standard, about one-third of households have unaffordable mortgage payments, according to a recent report from Harvard University. What’s more, the number of severely cost-burdened homeowners—those who spend 50% or more of their income on their mortgage—has skyrocketed from 1.1 million in 2001 to 7.6 million in 2015.

Numbers like that have young people considering homes in smaller places.

In Athens, Ohio, the average listed home price is $189,000, far less than the national median listing price of $259,000, according to Zillow.com. But home price isn’t the only factor. The ability to save up for a down payment matters, too.

“The main thing that jumps out to me is that those are all relatively affordable cities. Lower rents allow millennials to save for a down payment,” says Andrew Woo of ApartmentList.com. Indeed, according to Zillow, one-bedroom apartments in Athens cost $750 a month. “Generally, pricey urban areas such as San Francisco and New York have a large share of renters, as homeownership is out of reach for most, and many millennials plan to settle down and purchase a home in a different metro,” notes Woo.

Other Millennial Moving Lists

The Ellie Mae list reveals only cities where a high percentage of millennials are buyers—not necessarily places that are popular with younger adults. More mundane explanations, like demographics, play a role in statistics like this, too. The younger a population, the higher the percentage of millennial buyers.

There are plenty of other “where are millennials moving” lists. Different methodologies reach different results, but the overall narrative is the same.

The Urban Land Institute, calculating relative growth of the millennial population, said earlier this year  that Virginia Beach, Richmond, and Pittsburgh were among the hottest destinations for millennials. That list tells a similar story, however. Of traditional large coastal cities, only Boston cracked the top 10.

SmartAsset.com made its own list, too. New York, Los Angeles, and San Francisco don’t crack the top 25. Fort Wayne, Indiana, and Cary, North Carolina, on the other hand, made the top 10.

ATTOM Data Solutions, using a different set of criteria, shared another list of places popular with young home buyers—cities where the highest percentage of FHA loans (and their low down payments) have closed. It’s also full of smaller towns in Texas, North Dakota, and Pennsylvania.

“Millennials are a massive generation, the largest now in fact, and they certainly don’t act in a monolithic manner,” said Daren Blomquist, vice president of ATTOM. “So when we see increases in home sales to millennials in places like Lima, Ohio, or Pottsville, Pennsylvania, what it doesn’t necessarily mean is that there is a broad migration of millennials to small towns. But what it does mean is that there are millennials who are willing to move to small towns, likely because they are finding jobs there and they are finding a much more affordable cost of living, particularly when it comes to housing.”

So wherever millennials are headed, one thing is certain: affordability is more important than ever.  Fortunately, tools like Credit.com’s Mortgage Calculator and Mortgage Marketplace can help make housing more affordable no matter the location. Check out our Mortgage Resource Center to learn more.

Image: istock

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Millennials Don’t Understand How to Build Credit

A group of friends having fun together outdoors, sharing media on their smart phones from social networks.  Taken in Capitol Hill, Seattle, Washington.

It’s confirmed—millennials don’t know how to increase their credit scores.

At least that’s what a study from LendEDU indicates. In it, 500 millennials (ages 17–37) were asked questions regarding credit scores, and based on the results, it looks like Generation Y needs to do some credit homework.

Millennial Misconception #1: Use a Credit Card More to Build Good Credit

Almost half of millennials surveyed believe you can improve your credit score by using your credit card more. That is not true. But to be fair, thinking that you should use your credit card more to build your credit score is a general misconception that reaches beyond a millennial mindset. Plenty of baby boomers perpetuate the same misunderstanding about using credit cards more.

The reality is that a “high credit utilization rate” (translation: you use a credit card a lot) lowers your credit score because it makes you look like a bigger risk to lenders,

If you want to begin improving your credit score, you can start with the basics—buy only what you can afford, and pay off your credit card balance before the end of each month.

Millennial Misconception #2: Max Out and Pay Off a Card to Increase Your Score

When asked which behaviors would improve their credit scores, around 36% of millennials selected the following answer: “Maxing out, but paying a credit card on time.” This answer couldn’t be more wrong.

Maxing out a credit card can do serious damage to your credit score. When you max out your credit card, you get a “high credit utilization ratio” (translation: you’re using 100% of your available credit). The actual recommended credit utilization ratio is “below at least 30% and ideally [only] 10% of your total available credit limit(s).”

Besides the impact on your credit score, maxing out your credit card makes you susceptible to higher credit card interest, which can be 20% or more these days. Yikes!

Millennial Misconception #3: Carry Debt for a Good Credit Score

Another 28% of millennials in the survey incorrectly believe  “carrying debt is necessary for a good credit score.” It’s true that you can build up your credit score by taking on a bit of debt, but you’ll still need to pay the balance off each month and use less than 30% of your available credit.

Perhaps the best way to dispel these credit score misunderstandings is to go back to what actually makes up your credit score.

Quick Review: How Your Credit Score Is Calculated

Whether you’re a millennial or not, it doesn’t hurt to brush up on credit score basics.

A credit score is based on a calculation of the following:

  • Payment history: 35%
  • Current credit utilization: 30%
  • Credit history length: 15%
  • New credit inquiries: 10%
  • Credit mix: 10%

Paying your credit card bills on time and keeping your debt under control (again, under 30%) account for 65% of your credit calculation. If you take care of those two, the credit history (15%) should take care of itself, and you’ll get that score moving upward.

A credit score ranges from 300 to 850, with the national average at 673 in 2016. A score of 750 or above is considered excellent, and the other ranges are as follows: 700–749 (good), 650–699 (fair), 600–649 (poor), and below 600 (bad).

Of course, the higher the credit score, the better (lower) interest rate you’ll get for a mortgage, auto loan, etc., which can save you hundreds or even thousands a year in interest payments. So a word of advice to millennials: get a copy of your credit report, and make sure you have a basic understanding of how that score is calculated—so you don’t pay for it in the future.

Image: RyanJLane

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How Millennials Are Changing the Grocery Store

Here's why fewer and fewer millennials are going grocery shopping.

Next time you run to the grocery store for bread and milk, you might find yourself staying for a champagne tasting. Or seduced by Comice Pears. Or perhaps you’ll just stay home and cook the elicoidali pasta and mascarpone cheese from your Blue Apron box.

The digital age has changed how we shop for everything, and now food is front and center on the disruption list.

It’s hard being an old-fashioned grocery store these days. Adults, for the first time since such data was recorded, are spending more money eating out than cooking in. But even when they do buy their food, the market is enduring what analysts coldly call “grocery channel fragmentation.”

Pam Danziger, a luxury goods expert, said simply that young eaters are on the hunt for something “distinctive and different.”

Small, boutique food shops that are part-restaurant, part-brew pub, part-exotic grocer are all the rage.

“I find more and more that millennials are looking for special experiences,” said Danziger, author of the book Shops That Pop. “They are not just looking for products. They want a better quality service experience from people who really know their stuff.”

They don’t just want a good pear. They want to know why that pear goes great with that salad. And they might even want to know who grew that pear.

“There’s nothing like going to specialty wine store where [workers] can really advise you on what you are getting,” she said. “This has happened with food now.”

It’s not just happening in hip urban areas on the coasts. Danziger points to small independent food retailers, like Dorothy Lane Market, in Dayton, Ohio, (with its Comice “Holiday Pear”) as examples of a national trend that seems to have staying power.

The do-everything grocery store is struggling to stay relevant in this environment — that’s why shopping carts have cupholders for craft microbrews sold by the growler now — but don’t make the mistake of thinking huge grocers have always ruled the food world. They are a relatively recent development, dating back to the 1930s, when food preparation time shrank as more women entered the work force. Specialty grocers echo a time before that, Danziger said, when everyone “bought local.”

“In the 30s, everyone went to the local butcher,” she said. “What is old is new again.”

Web-Surfing for Groceries?

Well, not everything. On the other end of the digital spectrum, consumers are increasingly skipping the shopping trip altogether and letting the specialty groceries come to them.

Home delivery isn’t new either: Firms have been trying to find the right formula to ship cereal and produce to homes since the beginning of internet time (Remember Webvan? Perhaps you’re not old enough). Blue Apron and competitors like Hello Fresh and Plated seem to have hit on a winning formula by combining the convenience of delivery with the quest for special experiences.

Unless you’re living under a rock or are over 38, meal-in-a-box firms neatly package ingredients and recipes with dry ice, and send it to your home with simple preparation instructions. For about $10, a fairly small meal and about 30 minutes of work, aspiring chefs can feel like culinary experts.

The rise of the meal-in-a-box business has been meteoric. Blue Apron said it delivered 500,000 boxed meals in 2013, and now it delivers 8 million boxed meals a month. HelloFresh, a German competitor, is eyeing a possible public offering next year.

“I don’t think we’ve seen shopping change so dramatically ever,” Marty Siewert, senior vice president for consumer and shopper analytics at Nielsen, told the Wall Street Journal. “Those things in the past that have been real drivers for grocery in terms of freshness and quality aren’t the key drivers for millennials.”

All these changes are occurring against a dramatically different grocery landscape. The Food Marketing Institute’s annual report is full of data showing how grocery shopping is in the midst of a revolution. For example, the days of one member of a household buying the food at one nearby grocery store are essentially over, the FMI said.

“Shoppers increasingly rely on a broader number of less traditional channels, or claim no retailer as a primary store,” it noted in its report.

Meanwhile, the majority of households now employ “co-shopping” or “shared shopping.” That means both partners in a marriage buy groceries — often because one doesn’t agree with the other’s taste in food, the report said. That means more trips to more stores.

“Traditional grocery store as a primary channel has dipped to just below half of all shoppers,” the report said.

Online shopping is still small but growing. While only 5% of shoppers say they use online-only retailers “regularly,” another 15% say they have done so occasionally, up from 11% in 2015. When you ask only millennials, the market segment uptake is even more impressive: 28% of those 18 to 37 have bought groceries online.

Frugal Foodies

Digital is driving food shopping in other ways, too. Nearly 60% of millennials say they use digital coupons, and 66% say they look up recipes online while shopping. (If you’re looking for frugal meals, by the way, try this 16-cent breakfast.)

And lest you think they are only shopping for high-end arugula, one factor still trumps all others for food shoppers both young and old: price. That holds true for co-shoppers and specialty shoppers alike. All those groups say lower prices are the biggest factor in where they’ll shop, with nearly twice as many shoppers prioritizing savings over variety and quality.

Still, Danziger is sure that food consumers want more than iceberg lettuce and white bread, and the retailers who give them better experiences will survive the changes.

“People are looking for a higher quality of life, that’s what this is all about,” she said. “Retail success will be less about what you sell and more about how you sell it.”

No matter how you choose to grocery-shop, it’s important to stay on budget. High levels of debt, related to artisanal cheese or otherwise, can hurt your bank account and your credit. You can see where your credit stands by viewing two of your free credit scores, updated every 14 days, on Credit.com.

Image: gilaxia

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