5 Metro Areas Millennials are More Likely to Rent instead of Buy in

Back in the early-to-mid 2000s, home buying for young adults started slowing down and continues today. According to this ADOBO report, only 32% of millennials were homeowners in 2015. For the most part, homeownership for young adults has been decreasing over the last decade. In 2015, the average time to save up for a down payment is nearly 16 years toward a $278,000 home! With high down payments and an overwhelming amount of student loan debt, who can own a home? Because cost of living is high and many post-grad students are struggling to find decent-paying jobs, renting is a lot more appealing than owning. Below are 5 metro areas that millennials are more likely to rent instead of buy in!

1. Los Angeles/Long Beach/Anaheim, CA

  • Percentage of Millennial Homeowners 2015: 17.8%
  • Average down payment: $112,033

It would take over 30 years to save for a down payment as a millennial, and that’s if they save at least 15% of their income annually. In 2015, 82.2% of millennials rented in this area. Now, with a fairly high unemployment rate in LA, many young adults choose to live at home with their parents to save money. In fact, over 40% of millennials live at home. As of February of this year, the median rent for a one-bedroom apartment is $1,920.

2. Urban Honolulu, HI

  • Percentage of Millennial Homeowners 2015: 18.3%
  • Average down payment: $98,823

As of 2015, only 18.3% of millennials can afford to own a home in Honolulu, so many opt to rent instead. Currently the average rental rate for an apartment is about $2,155, whereas last fall, the median rent for a one-bedroom was $1,730.With a low unemployment rate, young adults are able to live in this city. Despite high rent, renting is definitely more favorable than buying since the average millennial home value is nearly $500,000 as of 2015.

3. San Diego/Carlsbad, CA

  • Percentage of Millennial Homeowners 2015: 19.8%
  • Average down payment: $90,522

In 2015, 80.2% of millennials rented in the greater San Diego area. With a low percentage of millennial homeowners and a high percentage of millennial renters, this area is third on our list. San Diego/Carlsbad has the lowest average down payment as of 2015 on this list, but it would still take about 25 years to save for a down payment. It also doesn’t help that millennials in this area pay the second highest tax rate in the U.S., so renting is a lot more appealing than owning.

4. New York City/Newark/Jersey City, NJ

  • Percentage of Millennial Homeowners 2015: 19.8%
  • Average down payment: $96,021

The greater New York City area is an appealing place for millennials to live since the city is full of opportunities. However, many choose to rent in the Jersey City/Newark area since the commute to NYC is feasible and fairly quick. As of last year, the median rent for a one-bedroom unit in Jersey City was $2,590. On the other hand, the median rent for a one-bedroom in Manhattan is a whopping $3,350 as of February 2017. Same as those in San Diego/Carlsbad, 80.2% of millennials rented in the NYC area in 2015. However, many young adults do still choose to live at home in this metro area to save money, and we can’t blame them.

5. San Jose/Sunnyvale/Santa Clara, CA

  • Percentage of Millennial Homeowners 2015: 20.2%
  • Average down payment: $147,415

The last on this list but absolutely nowhere near the least is the greater San Jose area. As the area with the largest average down payment on a home on this list, it’s no wonder that millennials are renting instead of buying! If they were able to put aside 15% of their income each year, it would still take 28 years to save up for a down payment. Because the employment rate continues to grow in this area, the demand for housing is great and living in the San Jose area is expensive. As of this year, the average rent for an apartment in the San Jose area comes with a hefty price tag of $2,842. If you want to live alone, the average apartment rent for a one-bedroom is $2,477.