How Millennials Are Shifting the Housing Market

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Published : September 18th, 2018
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Category : Editorials

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 is based in San Francisco. Entrepreneur with over twenty years of C-level operations experience, including turnarounds and startups.
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