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How Millennials Are Shifting the Housing Market

Summary:
They’re 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

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They’re 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.

Rents have plunged from their respective peaks in Chicago & Honolulu, have spiraled down in New York, Washington DC, & others, but are surging in many markets. Read… Update on Rental Bubbles & Crashes in US Cities 
 

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Wolf Richter
Founder, Wolf Street Corp. In his cynical, tongue-in-cheek manner, he muses on WOLF STREET about economic, business, and financial issues, Wall Street shenanigans, complex entanglements, and other things, debacles, and opportunities that catch his eye in the US, Europe, Japan, and occasionally China.

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