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Millennial demand is driving up prices in neighborhoods with kids, and the trend is growing

A record number of Americans will reach the peak age for first-time home buyers this year, adding to an already competitive market for homes in family-friendly neighborhoods

- Home values in ZIP codes with a higher share of kids younger than 18 are growing faster than homes elsewhere. This is due to demand from millennials looking for homes that meet the needs of their growing families.

- More millennials will reach the age of 32, the peak age for first-time home buyers, over the next two years than ever before.

Feb 3, 2022

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SEATTLE, Feb. 3, 2022 /PRNewswire/ -- Home values are growing fastest in areas with the highest share of kids, reflecting the impact millennial house hunters are making on family-friendly neighborhoods with a shortage of homes for sale. A record number of millennials will reach key age milestones for home buyersi over the next two years, which may accelerate price gains even further. 

The top 10% of ZIP codes with the largest share of kids in each county analyzed saw an average of 21.3% growth from October 2020 to October 2021, compared to 17.6% in ZIP codes with the smallest share of kids. That trend started in 2013, which, not coincidentally, was the year the oldest millennials turned 32, the age when many new parents buy their first homes. That's the median age of first-time home buyers and one year older than the median age of fathers with newborns.ii

"As millennials go, so goes the housing market, and we are seeing now, as millennials age, that they are looking for homes that fit the needs of growing families," said Zillow economist Nicole Bachaud. "Millennial demand has helped push up home prices in areas with the most children. Competition for homes in these family-friendly areas should intensify in the coming years as more millennials reach the key age of 32, adding to the affordability squeeze."

Zillow analyzed 421 U.S. counties,iii representing 71% of the country's population. ZIP codes with more residents under 18 years oldiv are associated with higher home value growth in nearly two-thirds of the counties studied. Many of the counties where this relationship does not hold true are vacation destinations, where part-time residents have unconventional housing demands. Home value growth in these family-friendly areas began to outpace nearby ZIP codes in 2013, and the correlation between kids and home value growth has been nearly perfect for each year since 2017.

That first wave of early-30s millennials had the benefit of discounted home prices as a result of the Great Recession; home values in these family-friendly ZIP codes were hit particularly hard between 2008 and 2011, in the midst of the nationwide housing crash. Today's first-time home buyers are encountering a much different market, especially as home price growth has reached record highs during the pandemic. 

The snowball of millennials reaching peak age for first-time home buyers has grown during the past nine years, and is about to turn into an avalanche. Nearly 200,000 more Americans will turn 32 this year than did so in 2021 ― the biggest jump since the transition from Generation X to millennials in 2013 — and even more will do so in 2023. This demographic reality should fuel even faster price growth in family-friendly ZIP codes over the next two years, making saving for a down payment even more challenging for first-time buyers.

This effect is strongest in counties that encompass the cities of Norfolk, Virginia; Washington, D.C.; Portland, Oregon; Austin, Texas; and Seattle. Counties where this trend does not hold true include those encompassing Galveston, Texas; Santa Barbara, California; and Ocean City, New Jersey.

Metro Area*

ZIP Code with Highest % of Kids

ZIP Code With Lowest % of Kids

ZIP
Code

% of
Kids

Year-over-Year Home
Value Growth (Dec.
2021)

ZIP
Code

% of
Kids

Year-over-Year Home
Value Growth (Dec.
2021)

New York, NY

08701

48.3%

28.2%

07756

2.2%

20.3%

Los Angeles, CA

92694

37.0%

25.2%

92637

0.2%

10.9%

Chicago, IL

60585

34.1%

16.9%

60606

3.6%

-0.8%

Dallas, TX

75253

36.5%

22.7%

75207

1.7%

16.0%

Philadelphia, PA

08104

32.6%

35.9%

19102

3.3%

-1.5%

Houston, TX

77032

40.6%

14.9%

77002

1.1%

4.2%

Washington, D.C.

22060

41.1%

7.8%

20037

2.1%

0.1%

Miami, FL

33327

33.8%

22.7%

33480

4.9%

30.4%

Atlanta, GA

30021

33.3%

26.5%

30303

1.0%

8.6%

Boston, MA

02052

29.9%

15.3%

02215

2.4%

0.6%

San Francisco, CA

94621

31.4%

15.6%

94704

3.2%

10.9%

Detroit, MI

48210

35.4%

-0.1%

48226

3.2%

7.7%

Riverside, CA

92301

34.4%

29.6%

92210

5.1%

30.1%

Phoenix, AZ

85297

36.4%

34.3%

85351

0.4%

29.5%

Seattle, WA

98439

34.4%

25.2%

98101

2.9%

3.6%

Minneapolis, MN

55411

35.7%

7.1%

55401

3.5%

0.3%

San Diego, CA

91906

33.0%

22.7%

92101

4.8%

15.0%

St. Louis, MO

63106

34.7%

19.3%

63102

2.6%

5.7%

Tampa, FL

33547

34.8%

30.2%

33573

6.1%

31.7%

Baltimore, MD

20755

32.4%

8.0%

21202

11.0%

11.2%

Denver, CO

80238

35.0%

17.5%

80202

2.2%

8.3%

Pittsburgh, PA

15110

30.1%

15.6%

15213

3.2%

11.6%

Portland, OR

97140

29.3%

20.3%

97209

3.5%

0.5%

Charlotte, NC

28088

30.4%

25.5%

28202

7.9%

13.0%

Sacramento, CA

95742

30.4%

23.2%

95814

6.5%

4.3%

San Antonio, TX

78242

32.2%

15.4%

78215

4.8%

13.5%

Orlando, FL

34773

35.7%

27.7%

32801

8.2%

16.0%

Cincinnati, OH

45232

47.4%

25.2%

45219

6.1%

14.8%

Cleveland, OH

44104

32.2%

20.5%

44114

4.5%

15.8%

Kansas City, MO

64126

36.7%

35.3%

64105

3.0%

8.5%

Las Vegas, NV

89086

37.0%

26.2%

89029

7.6%

24.8%

Columbus, OH

43211

32.2%

37.1%

43215

1.9%

6.0%

Indianapolis, IN

46235

32.4%

21.4%

46204

2.5%

7.4%

San Jose, CA

95020

27.8%

19.9%

95113

2.3%

-0.3%

Austin, TX

78724

34.1%

50.2%

78701

1.8%

23.4%

Virginia Beach, VA

23523

35.3%

17.7%

23517

8.4%

12.1%

Nashville, TN

37086

31.5%

27.8%

37201

3.8%

15.2%

Providence, RI

02907

28.4%

17.5%

02903

5.3%

12.3%

Milwaukee, WI

53218

34.4%

19.1%

53202

2.4%

7.1%

Jacksonville, FL

32081

29.3%

35.0%

32202

7.3%

22.7%

Memphis, TN

38126

35.6%

24.2%

38103

6.5%

13.1%

Oklahoma City, OK

73119

37.8%

21.5%

73102

2.6%

11.0%

Louisville, KY

40210

31.8%

20.3%

40202

6.1%

2.4%

Hartford, CT

06120

34.2%

15.2%

06103

3.9%

10.9%

Richmond, VA

23120

32.7%

15.8%

23230

13.0%

15.3%

New Orleans, LA

70447

32.6%

14.4%

70116

11.5%

1.7%

Buffalo, NY

14212

29.4%

28.6%

14222

8.6%

12.4%

Raleigh, NC

27571

37.2%

32.0%

27605

8.7%

20.9%

Birmingham, AL

35091

30.8%

13.6%

35233

2.3%

12.0%

Salt Lake City, UT 

84096

41.6%

29.9%

84102

6.3%

21.1%

*Table ordered by market size

About Zillow Group
Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining real estate to make it easier to unlock life's next chapter. As the most visited real estate website in the United States, Zillow® and its affiliates offer customers an on-demand experience for selling, buying, renting or financing with transparency and ease. 

Zillow Group's affiliates and subsidiaries include Zillow®, Zillow Offers®, Zillow Premier Agent®, Zillow Home Loans™, Zillow Closing Services™, Zillow Homes, Inc., Trulia®, Out East®, ShowingTime®, Bridge Interactive®, dotloop®, StreetEasy® and HotPads®. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org).

i Consumer Finance Protection Bureau: https://files.consumerfinance.gov/f/documents/cfpb_market-snapshot-first-time-homebuyers_report.pdf
ii Human Reproduction, Volume 32, Issue 10, October 2017, Pages 2110–2116: https://academic.oup.com/humrep/article/32/10/2110/4096427.
iii Every U.S. county with at least 10 ZIP codes containing 1,000 households or more was included in the study. This threshold was imposed to ensure a sufficient sample of homes and ZIP codes in each county.
iv Estimates of each ZIP code's share of population under 18 years old come from the U.S. Census Bureau's 2019 American Community Survey five-year estimates.

 

SOURCE Zillow

For further information: Alex Lacter, Zillow, press@zillow.com