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Historically low interest rates, higher family savings, and new-found work-from-home opportunities driven by pandemic-related restrictions have combined to stimulate housing demand that raised the median price of existing single-family homes by 39% from 2018 to 2021. This boom impacted all ages of homebuyers, and was particularly pronounced on millennials, who are now in their prime homebuying years.
The total number of U.S. mortgage originations each year has generally fallen from just over a trillion dollars per quarter in 2003 to a relatively steady average of $430 billion between 2008 and 2019. However, after a spike at the end of 2019, mortgage originations have again peaked at well over a trillion dollars per quarter at the end of 2020 and into 2021, reflecting a surge in home sales amid the COVID-19 pandemic.
Since 2014, millennials have comprised the largest share of homebuyers in the U.S. Today, the generation makes up about 37% of all homebuyers, according to a recent National Association of Realtors report, with Gen Xers comprising the next biggest group at 24%. A survey of millennial homebuyers in late 2020 revealed that over half had accelerated their planned home purchases in response to the pandemic.
The drive for homeownership has been strong for millennials, despite the substantial financial pressures they faced. For example, most millennials had no existing home equity to apply to their mortgage loans, as a majority of buyers under 40 were first-time homebuyers. Additionally, even though millennial mortgage applicants have experienced strong income growth in recent years, these salary increases often came from high-tech jobs located in larger metro areas with higher home prices, according to CoreLogic. One survey found that most millennial homebuyers ended up buying homes that needed more renovations than expected, and over a third exceeded their anticipated budget.
Undeterred, millennial homebuyers tended to take out smaller loans, and usually with higher loan-to-value ratios, based on data from the Home Mortgage Disclosure Act. In 2020, the average home loan value for applicants between 25- and 34-years old, an age range which represents the majority of millennials, was $255,000. This compares to an average home loan value of $275,000 for 45- to 54-year old applicants, which represents most Gen Xers. Further, most millennials tend to apply for home loans with a higher median loan-to-value ratio (90%) than most Gen Xers (80%).
The demographic allocation of homebuyers across the nation reveals that the Northeastern and Great Lakes states tend to have the highest share of millennial homebuyers, as well as North Dakota and Utah. While the state data reveals that the millennial population share is loosely correlated with the millennial share of homebuyers, there are notable exceptions. For example, expensive states like California and Hawaii have large millennial populations, but comparatively fewer young homebuyers.
The data used in this analysis is from the Federal Financial Institutions Examination Council’s Home Mortgage Disclosure Act. To determine the locations with the most millennial homebuyers, researchers at Construction Coverage calculated the millennial share of home purchase loans originated in 2020. Due to data availability limitations, the 25- to 34-year-old age cohort was used to approximate the millennial generation. In the event of a tie, the location with the greater total millennial home purchase loans was ranked higher.
Here are the metro areas with the most millennial homebuyers.
Large Metros Where Millennials Are Buying Homes
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15. Chicago-Naperville-Elgin, IL-IN-WI
- Millennial share of home purchase loans: 36.2%
- Total millennial home purchase loans: 36,889
- Median loan amount: $245,000
- Median loan-to-value ratio: 90.0%
- Median interest rate: 3.1%
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14. Columbus, OH
- Millennial share of home purchase loans: 36.3%
- Total millennial home purchase loans: 9,821
- Median loan amount: $225,000
- Median loan-to-value ratio: 91.8%
- Median interest rate: 3.2%
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13. Milwaukee-Waukesha, WI
- Millennial share of home purchase loans: 36.5%
- Total millennial home purchase loans: 7,065
- Median loan amount: $225,000
- Median loan-to-value ratio: 90.0%
- Median interest rate: 3.3%
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12. San Jose-Sunnyvale-Santa Clara, CA
- Millennial share of home purchase loans: 36.6%
- Total millennial home purchase loans: 5,563
- Median loan amount: $765,000
- Median loan-to-value ratio: 80.0%
- Median interest rate: 2.9%
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11. Boston-Cambridge-Newton, MA-NH
- Millennial share of home purchase loans: 36.6%
- Total millennial home purchase loans: 19,690
- Median loan amount: $425,000
- Median loan-to-value ratio: 85.0%
- Median interest rate: 3.0%
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10. Philadelphia-Camden-Wilmington, PA-NJ-DE-MD
- Millennial share of home purchase loans: 36.8%
- Total millennial home purchase loans: 21,560
- Median loan amount: $265,000
- Median loan-to-value ratio: 90.0%
- Median interest rate: 3.1%
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9. Denver-Aurora-Lakewood, CO
- Millennial share of home purchase loans: 36.9%
- Total millennial home purchase loans: 18,841
- Median loan amount: $385,000
- Median loan-to-value ratio: 90.0%
- Median interest rate: 3.1%
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8. Seattle-Tacoma-Bellevue, WA
- Millennial share of home purchase loans: 37.1%
- Total millennial home purchase loans: 20,420
- Median loan amount: $475,000
- Median loan-to-value ratio: 85.0%
- Median interest rate: 3.0%
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7. Rochester, NY
- Millennial share of home purchase loans: 37.4%
- Total millennial home purchase loans: 3,695
- Median loan amount: $155,000
- Median loan-to-value ratio: 95.0%
- Median interest rate: 3.1%
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6. Minneapolis-St. Paul-Bloomington, MN-WI
- Millennial share of home purchase loans: 38.1%
- Total millennial home purchase loans: 21,954
- Median loan amount: $275,000
- Median loan-to-value ratio: 94.2%
- Median interest rate: 3.1%
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5. Detroit-Warren-Dearborn, MI
- Millennial share of home purchase loans: 38.2%
- Total millennial home purchase loans: 17,655
- Median loan amount: $205,000
- Median loan-to-value ratio: 95.0%
- Median interest rate: 3.2%
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4. Salt Lake City, UT
- Millennial share of home purchase loans: 38.3%
- Total millennial home purchase loans: 7,367
- Median loan amount: $325,000
- Median loan-to-value ratio: 94.5%
- Median interest rate: 3.1%
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3. Pittsburgh, PA
- Millennial share of home purchase loans: 38.6%
- Total millennial home purchase loans: 8,462
- Median loan amount: $195,000
- Median loan-to-value ratio: 90.0%
- Median interest rate: 3.1%
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2. Grand Rapids-Kentwood, MI
- Millennial share of home purchase loans: 39.6%
- Total millennial home purchase loans: 5,859
- Median loan amount: $205,000
- Median loan-to-value ratio: 93.0%
- Median interest rate: 3.3%
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1. Buffalo-Cheektowaga, NY
- Millennial share of home purchase loans: 40.8%
- Total millennial home purchase loans: 3,792
- Median loan amount: $165,000
- Median loan-to-value ratio: 95.0%
- Median interest rate: 3.1%
Detailed Findings & Methodology
The data used in this analysis is from the Federal Financial Institutions Examination Council’s Home Mortgage Disclosure Act. Only conventional home purchase loans approved in 2020 were considered. To determine the locations with the most millennial homebuyers, researchers calculated the millennial share of all approved home purchase loans. For the purpose of this analysis, the 25- to 34-year-old age cohort was used to approximate the millennial generation. In the event of a tie, the location with the greater total millennial home purchase loans was ranked higher. To improve relevance, only metropolitan areas with at least 100,000 residents were included. Additionally, metros were grouped into cohorts based on population size: small (100,000–349,999), midsize (350,000–999,999), and large (1,000,000 or more).
