Housing and Job Market Outlook for Recent Millennial Graduates

“Because of their size, whatever they decide to do will have an impact on the housing market,” says Nela Richardson, chief economist for the real estate company Redfin.

An EdAssist survey of over 1,000 Americans with student loan debt found that 50 percent say their debt has prevented them from buying a house.

However, graduates in their 30s who have finished repaying their loans are actually buying homes at rates approximating historic norms, according to a recent study by University of Michigan economics professor Susan Dynarski.

Dynarski says that those who don’t attend college or those who carry loan debt after failing to complete college are unable to afford to buy homes.

In contrast, graduates who use their degrees to find well-paying jobs are able to become homeowners.

In other words, the type of job a person gets after college has the biggest impact on their ability to own a home. In addition, where you live and work can also have an effect on whether you rent an apartment or buy a home.

Here’s a look at how local economic variables impact the rental, home buying and job market outlooks for recent graduates.

The Rental Market

For recent college graduates who opt to rent, the most affordable rental markets are inland in the Midwest and Southern states, Trulia reports.

Trulia rated the affordability of rental markets around the country by comparing a new graduate’s average salary to:

• The percentage of local rental units that are affordable for that salary
• The maximum monthly rental payment for an affordable unit
• The number of roommates needed to make a rental affordable
• The median number of bedrooms

By these criteria, St. Louis came out on top, with:

• 18.6 percent of units falling within the affordable range
  • For an average monthly rent of $666
  • With 0.3 roommates needed
• To afford a two-bedroom apartment

Top 5 Cities

1. St. Louis
2. Dallas
3. Houston
4. Atlanta
5. Phoenix

Most of the least affordable areas were on the West Coast in Oregon or California, and Miami also ranked in the bottom five for affordability.

In cities such as New York City, San Francisco and Boston, recent graduates had relatively high salaries, but rent was also exceptionally high.
 

The Home Buying Market

Zillow took a look around the country to identify the best markets for first-time home buyers.

Zillow ranked different cities’ buying markets based on:

• Median home values
• Affordability of mortgage payments
• Inventory of homes for sale
• Amount of competition with all-cash buyers

Indianapolis came out on top, with:

• A median home value of $130,200
• Mortgages amounting to 11 percent of income
• High inventory of home availability

Top 5 Cities

1. Indianapolis
2. Pittsburgh
3. Memphis
4. Cleveland
5. Chicago

Followed by Oklahoma City, St. Louis, Houston, Tampa and Birmingham.

The toughest market for first-time home buyers was Salt Lake City, followed by Washington, D.C., New York, San Jose, Seattle and Austin.

The Job Market

The best job markets for millennials are often on the East or West Coasts, where high salaries compensate for high housing costs.

Bankrate ranked the top 100 cities for recent graduates to start a career in, based on:

• Job availability
• Salary
• Career advancement potential
• Quality of life
• Social factors

New York City came out on top, largely due to ranking first in the nation for career advancement potential. It’s hard to find a job in New York, but once you find the right one, you’ve got a lot of opportunity for upward mobility.

Housing costs are high, however, so millennials getting offers for good jobs in the Big Apple should take some time to research NYC apartment rental options and plan their budget before making big decisions.

Top 10 Cities

1. New York
2. Los Angeles
3. San Francisco
4. Washington, D.C.
5. San Jose
6. Boston
7. Chicago
8. Seattle
9. Dallas
10. Philadelphia