5 Cities Millennials Are Fleeing: Are They Becoming Too Expensive?
In their younger years, millennials flocked to certain major cities en masse. However, many are now part of a mass exodus, opting to put down roots elsewhere.
Results of a recent Bank of America study highlighted five cities once beloved by millennials that are now topping the list of places they’re fleeing. Here’s a look at them with cost of living data sourced from Redfin.
Los Angeles
- Average home sale price: $1 million
- Average apartment rent: $3,198 per month
- Housing costs (combined): 140% more than the national average
- Groceries: 11% more than the national average
- Healthcare: 11% more than the national average
Boston
- Average home sale price: $830,000
- Average apartment rent: $3,781 per month
- Housing costs (combined): 123% more than the national average
- Groceries: 11% more than the national average
- Healthcare: 17% more than the national average
San Jose
- Average home sale price: $1.4 million
- Average apartment rent: $2,627 per month
- Housing costs (combined): 142% more than the national average
- Groceries: 21% more than the national average
- Healthcare: 18% more than the national average
New York*
- Average home sale price: $1.2 million
- Average apartment rent: $4,630 per month
- Housing costs (combined): 384% more than the national average
- Groceries: 29% more than the national average
- Healthcare: 9% more than the national average
*Based on Manhattan data.
San Francisco
- Average home sale price: $1.3 million
- Average apartment rent: $3,642 per month
- Housing costs (combined): 202% more than the national average
- Groceries: 30% more than the national average
- Healthcare: 29% more than the national average
Why Millennials Are Leaving These Cities
There are many reasons millennials have left these cities, including COVID-19, high costs of living and life events, said Jay Garvens, business development manager at Churchill Mortgage.
“From a real estate and mortgage perspective, the millennials are coming to maturity,” he said. “They range from 26 to 42 years old and this is their transition into the most productive and formative period of their lives.”
He said millennials have entered the part of their careers where their salaries are increasing, and they’re also getting married and having children.
“Every generation goes through this — millennials just do it in larger numbers, so it draws more attention,” he said.
Since millennials are in their prime child-bearing ages, he said they’re moving out of big cities because they’re more expensive to live and less conducive to raising children.
“Statistically, millennials are moving out of these cities and to ‘tier two’ cities like Austin, Raleigh, Jacksonville, Henderson and others,” he said. “The only exceptions are Dallas and Denver, as they are ‘tier one’ cities that remain attractive to millennials.”
He said the five cities millennials are moving from are becoming too expensive, but they’re also statistically less safe than cities millennials are migrating to.
While other factors may be involved in millennials’ decision to leave these cities, he doesn’t believe they’re to blame.
“These are just naturally occurring factors in a maturing generation,” he said. “Starting a family is a key trigger to purchasing a home or at least renting and moving into one.”
Therefore, he believes a lot of this transition is just part of millennials growing up.
“It’s more difficult to raise a child — or the pet you generally get around the same timeframe — in a tiny home, apartment or condominium,” he said. “The ‘tier two’ cities are more affordable, but also allow a growing family to have more space and a safer environment.”
While he believes the exodus from major cities is a permanent thing for millennials, he noted that their younger counterparts are taking their place.
“Gen Z is right behind them and moving into these big cities — they are just doing so in smaller numbers,” he said.
Ultimately, he believes the combination of salaries, marriages, childbirths and home purchases are happening at high rates for millennials right now, which are the primary factors driving them out of major cities.
On the other hand, Jon Leckie, a researcher for Rent., believes price is driving people out of the most expensive metro areas.
“Rent.’s research on migration has seen this dynamic play out at the regional level,” he said. “For most of 2022, renters were fleeing metros in the Northeast and the West Coast for destinations in the South and Midwest, and there is certainly a price correlation.”
He noted that the priciest metros — including the five cities highlighted above — tend to be in the Northeast and on the West Coast, while the cheaper metro areas are in the South and Midwest.
“As a result, we continue to see steady price growth in the South and Midwest due to the increased demand in those areas,” he said. “But so far in early 2023, we’ve also seen the biggest price reductions in the Mountain West as inbound migration waned and price increases throughout the pandemic made these locations less attractive.”
Additionally, he said there has been a slight rebound in people moving to the West Coast.
“As long as there continues to be significant price differentials between regions, along with the continuation of other factors like remote work, we will continue to see elevated interest in cheaper areas,” he said. “But that doesn’t make the dynamic permanent and it’s not all about price.”
He said location is also still a major factor.
“The Mountain West is still cheaper than the West Coast, but as that differential has decreased the premium to live in West Coast metros has become more attractive,” he said. “The same will happen in the Northeast if the price differential between it and destinations in the South and Midwest also continue to rapidly shrink.”
Stay tuned to see if millennials keep moving away from Los Angeles, Boston, San Jose, New York and San Francisco or if they will have a change of heart.
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