Your Rental Concierge

In just the past week, extreme heat has broken records in cities across the U.S., and severe flooding has closed one the country’s most popular national parks. The effects of climate change are already upon us, and addressing this global crisis is undeniable among the most pressing issues of our time. Housing is inextricably linked to the climate, and the way that we organize our cities has a profound impact on our carbon footprints. In densely populated urban areas – in which individuals occupy less space and are less reliant on cars – per-capita emissions are significantly lower than they are in the surrounding suburbs, where cars are typically the dominant commute mode and residents often bear long drives in traffic to access jobs in the city. Given this dynamic, it is crucial that we grow our nation’s population centers in ways that prioritize dense, transit-oriented development.

Unfortunately, the pandemic appears to be pushing us in the opposite direction. Remote work has made proximity to the office a less pressing concern and enabled more people to move further from job centers. At the same time, skyrocketing prices on both the rental and for sale sides of the market have pushed many households to expand their searches further from the urban core, where housing tends to be more affordable. As a result, demand for rentals has been strongest in the suburbs of large metros, with the potential to drive precisely the type of sprawl that is at odds with progress on emissions.

For any given metropolitan area, our analysis considers “outbound” and “inbound” searches:

• Outbound searches are all searches performed by users who live in that metro, regardless of where the user is searching. Outbound searches from a metro can be for the same metro or a different metro.
• Inbound searches are all searches for apartments within the metro, regardless of where the user lives. Again, inbound searches can be from the same metro or a different metro.

The table below shows the metros with the highest share of cross-metro outbound and inbound search activity. On the left are the ten metros with the largest share of residents who are looking to move somewhere new, and on the right are the ten metros with the largest share of searches coming in from out-of-town.

Metros that are seeing a high share of outbound searches leaving the metro, but a low share of inbound searches coming from other markets may be at risk of losing renters. Conversely, when a high share of searches are coming from other parts of the county but few existing residents are looking to leave, a market is likely to be fast-growing. Still other metros exhibit both a high volume of outbound searches to other parts of the country, and as well as a high volume of inbound searches from other parts of the country, indicating that the market is popular, but experiencing high turnover.

As we emerge from the pandemic, five metros are behaving like revolving doors and show up in both lists: San Jose CA, Raleigh NC, Denver CO, Austin TX, and Nashville TN. All five benefit from technology-driven economies that offer relatively high wages, but also struggle with relatively expensive housing markets. San Jose and Raleigh in particular are the only two major metros where more than half of all searches, inbound and outbound, cross metropolitan lines. In San Jose the majority of search activity remains within state lines, highlighting the migration flows that exist between the nearby San Francisco and Sacramento metros, as well as Los Angeles to the South. Raleigh shares a lot of search activity with nearby Charlotte and Durham, but also received a sizable share of interest from Atlanta GA. As new renters are drawn to these tech hubs by strong job opportunities, existing residents risk being priced out by rising housing costs.

Millennials today are in their prime home-buying years (ages 25 to 40 in 2021, according to the definition we use here¹) and as such, their homeownership rate has increased faster than any other generation over the past decade. In 2021 the millennial homeownership rate stood at 48.6 percent, up from 30 percent in 2011.² But despite steady increases, the Millennial homeownership rate still significantly lags that of older generations. For Generation X (ages 41 to 56) the homeownership rate is over 20 percentage points higher than that of Millennials at 69.1 percent. Next is the Silent Generation (ages 76 and up), for whom homeownership has dipped recently but still stands at 78.0 percent. And finally, the nation’s highest homeownership rate belongs to the Baby Boomers (ages 57-75), who came of age after the post-WWII housing boom and today enjoy a homeownership rate of 78.5 percent.

It comes as no surprise that in 2021, Millennials in their 20s and 30s will have a lower homeownership rate than Boomers in their 50s and 60s. However, even when controlling for age, Millennial homeownership continues to trail previous generations. The chart below plots each generation’s homeownership rate by age to provide a more apples-to-apples comparison. Among the oldest batch of millennials who reached age 40 in 2021, the homeownership rate is 60 percent. In comparison, 64 percent of Gen Xers, 68 percent of Baby Boomers, and 73 percent of Silents owned homes when they were the same age. The gap emerges shortly after age 25 and persists throughout adulthood, highlighting how price increases and cultural shifts have led more Millennials to rent (or live with family) for longer.

Most recently, the COVID-19 pandemic sparked a housing market frenzy with polarizing effects for Millennial renters. On one hand, they purchased an outsized share of homes during the pandemic. Millennials account for 30 percent of adults but 43 percent of homebuyers during the pandemic, according to the National Association of Realtors.³ The Millennial homeownership rate rose more than 5 percentage points from 2019 to 2021, over twice as fast as any other generation.

On the other hand, housing supply dropped to all-time lows in late-2020 and prices soared. Across the country, the median home sales price jumped from $329,000 at the start of 2020 to $408,100 by the end of 2021. For Millennial renters who could not afford to buy a home before the pandemic, their opportunities for homeownership have waned dramatically over the two years that followed. Even more recently, mortgage rates have spiked above 5 percent for the first time in a decade, adding yet another hurdle for Millennials who have yet to attain homeownership.