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LendingTree Ranks Most Popular Cities for Millennial Homebuyers

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Millennials make up the largest group of homebuyers in the United States, surpassing members of older (and richer) generations like Generation X and baby boomers. And though the COVID-19 pandemic has doubtlessly caused some millennials to put their homebuying plans on hold, many members of this generation are still looking to take advantage of near record-low mortgage rates to buy a house.

But where are millennials looking to buy? To answer this question, LendingTree analyzed mortgage purchase requests made on the LendingTree platform across the nation’s 50 largest metros from Jan. 1 through Dec. 15, 2020.

What LendingTree found was that millennials (defined as anyone born between 1981 and 1996) make up a majority of potential homebuyers in most of the country’s largest metros, including San Jose, Calif., Boston and Denver.

Key findings

  • San Jose, Calif., Boston and Denver are the metros where millennials make up the largest share of purchase requests. In San Jose, 61.79% of purchase requests came from millennials. In Boston and Denver, the numbers are 59.09% and 59.07%, respectively.
  • Las Vegas, Tampa, Fla. and Phoenix have the lowest percentages of millennials making purchase requests among the metros. Millennials made just 42.58% of the purchase requests in Las Vegas, 44.54% in Tampa and 46.33% of the purchase requests in Phoenix, indicating these metros may not be that popular with millennials.
  • Millennial homebuyers in San Francisco, San Jose, Calif. and New York City are the oldest in our study. The average age for these three areas was 32.10 years old, about half a year older than the average 31.57 across all 50 of the largest metros in the country. Since these metros are so expensive, millennials likely need to spend more time saving before they’re ready to buy a house.
  • Salt Lake City, Buffalo, N.Y. and Detroit are the metros with the youngest millennial homebuyers. The average age for these three areas was 31.03 years old.
  • San Jose, Calif., San Francisco and New York City are markets where potential millennial homebuyers had the highest average credit scores. The average credit score for these three areas combined was 721. By comparison, the average credit score for millennial homebuyers across the 50 largest metros in the country was 669.
  • Memphis, Tenn., Virginia Beach, Va. and Birmingham, Ala., had the lowest average credit scores. Credit scores in these three areas were approximately 638, 639 and 640, respectively.

Most popular metros for millennial homebuyers

No. 1: San Jose, Calif.

  • Share of mortgage requests coming from millennials: 61.79%
  • Average millennial age: 32.12
  • Average credit score among millennials: 730
  • Average down payment amount among millennials: $158,040
  • Average requested loan amount among millennials: $704,318

No. 2: Boston

  • Share of mortgage requests coming from millennials: 59.09%
  • Average millennial age: 31.48
  • Average credit score among millennials: 705
  • Average down payment amount among millennials: $78,062
  • Average requested loan amount among millennials: $416,267

No. 3: Denver

  • Share of mortgage requests coming from millennials: 59.07%
  • Average millennial age: 31.25
  • Average credit score among millennials: 691
  • Average down payment amount among millennials: $56,937
  • Average requested loan amount among millennials: $354,433

Least popular metros for millennial homebuyers

No. 1: Las Vegas

  • Share of mortgage requests coming from millennials: 42.58%
  • Average millennial age: 31.82
  • Average credit score among millennials: 659
  • Average down payment amount among millennials: $37,289
  • Average requested loan amount among millennials: $273,496

No. 2: Tampa, Fla.

  • Share of mortgage requests coming from millennials: 44.54%
  • Average millennial age: 31.66
  • Average millennial credit score among millennials: 654
  • Average down payment amount among millennials: $30,298
  • Average requested loan amount among millennials: $218,632

No. 3: Phoenix

  • Share of mortgage requests coming from millennials: 46.33%
  • Average millennial age: 31.40
  • Average credit score among millennials: 659
  • Average down payment amount among millennials: $35,603
  • Average requested loan amount among millennials: $258,161

Tips for millennial homebuyers

Some millennials have accumulated less wealth than older generations, and they haven’t had as much time to build a strong credit history. To overcome these obstacles, it’s important to get your financial house in order.

Here are some tips to prep your finances for homeownership:

Work on your credit score. A solid credit history and higher credit score show lenders you know how to manage debt. Work on improving your credit score by making on-time payments and keeping your spending in check.

Pay down your monthly debts. Another factor lenders look at is your debt-to-income (DTI) ratio, the percentage of your gross monthly income that goes toward recurring debts. Maximum DTI ratios vary by loan program, however, so it’s a good idea to keep your total DTI ratio (which includes your monthly mortgage and all debt payments) at 36% or less.

Boost your savings. Whether you plan to buy a home next year or several years from now, you’ll need enough cash for a down payment and closing costs. Create a separate savings account for your homebuying expenses, and make regular deposits each month so you’ll have a cushion when it’s time to make your home purchase.

Know your loan options. It can be a challenge to build credit quickly or come up with a significant down payment. But don’t stress — there are specific first-time homebuyer programs designed to make homeownership more affordable. For example, borrowers with a credit score as low as 580 and a down payment of only 3.5% may qualify for a Federal Housing Administration (FHA) loan. Plus, many local and state agencies offer down payment assistance programs to help bridge the gap between your savings and down payment expenses.

Methodology

LendingTree analyzed mortgage requests and offers for borrowers ages 24 to 39 across the nation’s 50 largest metropolitan areas from Jan. 1, 2020 to Dec. 15, 2020, along with requests from the total population of mortgage seekers based on the property location.

The metro rankings were generated by looking at the percentage of total purchase mortgage requests received by LendingTree from borrowers in the millennial generation. The larger the share of requests from millennials, the higher ranking a metro received.

LendingTree research analyst Jacob Channel contributed to this report.

 

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