I spent a day this past week in New York City with a Stewart function of commercial real estate professionals at the New York Stock Exchange. The price of any stock is the future expectations of earnings, not its performance a month or year ago. It’s the future that counts.
The same is true about real estate markets. Future growth, or lack-there-of, will determine the destiny of cities. Just look at the past. In the early 1960s Detroit – the Motor City — was home to 1.7 million people compared to just 700,000 today. Galveston, prior to the Great Hurricane of 1900, was the business capital of Texas and one of the largest cities in the state. On the up-side are cities like Plano, Texas, which has boomed in recent decades due to major corporate relocations. The latest is Toyota of North America’s move to the Texas city and will ultimately bring 4,000 new jobs.
So where will the growth be strongest in the future? That likely can be answered by wherever Millennials go.
Millennials (under 36)
- Largest population cohort ever seen in the U.S
- Represent 64 percent of all first-time homebuyers but account for just 13 percent of the home-buying population
To figure out where Millennials are heading, Realtor.com examined the 60 largest cities in the country focusing on how much Millennials were viewing online listings compared to the national average. In addition to the data provided by Realtor.com, also added were the job growth rates for the 12-months ending February 2017 and the Q4 2016 median home prices for the Metropolitan Statistical Areas (MSA) as provided by the National Association of Realtors® (NAR). The top-10 online search markets for Millennials are detailed in the following table.
While some of these markets are currently hot, others are not. The Orlando MSA’s 4.30 percent 12-month job growth rate is the 7th best out of 401 MSAs and Divisions, while Houston’s anemic 0.73 percent (due the plunge in oil prices since 2014) places it 273rd best.
Note the difference in the median prices. The first median price is as reported by Realtor.com. The last column is the Q4 2016 median home price for the respective MSA as reported by the National Association of Realtors. There are differences between the two. My guess is that the Realtor.com median price is just for the city while the NAR median is for the entire MSA—including outlying suburbs and cities with more affordable housing.
To read the entire Realtor.com article click http://www.realtor.com/news/trends/top-10-millennial-cities/?identityID=577d5c8652b7729cf2011c9d&MID=2017_0331_WeeklyNL&RID=4056478642&cid=eml-2017-0331-WeeklyNL-blog_2_top10millenialcities-blogs_trends
Where Millennials go will shape the growth of America. Tighten your seat belt, it’s going to be a fun ride.