NEW YORK (MainStreet) — Chew on this: in much of the country, it is cheaper to own than to rent. Read that again. A RealtyTrac survey of some 473 U.S. counties found that in 68% it is cheaper to buy than to rent. But there is a big exception. In many of the counties that are most attractive to Millennials, renting is significantly cheaper. That makes sense, because, so far, Millennials are shaping up as renters, and they are delaying home purchases.
Per RealtyTrac numbers, in the 25 counties with the biggest jump in Millennial population in the period 2007 to 2013, fair market rental rates for a three bedroom dwelling average 30% of household income. Buying in those markets requires 36% of household income. In some markets, the spreads are even greater. Renting in Hudson County, N.J. - directly across from Manhattan, in Hoboken, Jersey City, Weehawken, etc. - runs around 33% of median household income. Buying takes a much bigger bite, around 47% of income to purchase a median priced home. Hudson County, by the way, ranks sixth in RealtyTrac’s tally of the places with the biggest influx of Millennials. Millennial population there grew by 35.67% in the 2007 to 2013 period.
Where else exactly are Millennials flocking? And where are they fleeing? Note: it is not cheap just about anywhere. RealtyTrac analysis pegs the average fair market rent in the top 25 counties for Millennials at $1,459. That’s 19% above the national average. But some towns that draw Millennials are dramatically more affordable than many others.
The two top locations per RealtyTrac are close-in Washington, D.C. suburbs - Alexandria, Va. nabbed first place with a staggering 80.29% growth in Millennials. Fair market rent for a three bedroom is $1,951. Percentage of median income to rent is a highly affordable 28.18%. Adjacent Arlington, Va. saw a 78.31% surge in Millennials. Average rent also is $1951. That’s just 22.56% of median household income, making Arlington the most affordable town on the list despite a monthly rent approaching $2,000.
San Francisco - despite its reputation for pricey real estate - is a surprise third place finisher. Yes, rents are high (average: $2,801, according to RealtyTrac; that’s the highest in the top ten by far) but so are incomes. Still, that hefty rent grabs 42.6% of median income, which is the biggest rent bite of any town on the list. Yet Millennials keep coming. Their population in San Francisco is up 59.14% in the period.
Denver grabs fourth place, with a 53.32% increase in Millennials. But the average rent - $1,696 - is up 20% year on year, the biggest jump in the top ten and that may augur a cooling off of popularity. But, despite the rent climb, the payment represents just 32.95% of household income, placing Denver squarely in the middle of the affordability pack.
New York - that is, Manhattan - snares fifth, with an average rent of $1,904 (31.83% of household income) and a 44.95% gain in Millennial population.
In seventh place is Davidson County, Tenn. -- Nashville to you and me. The C & W hub draws Millennials with an average rent of $1,130, second lowest on the list. That rent is flat year over year, despite a 35.05% jump in Millennials. It takes 30.21% of median household income which means incomes are not big in Nashville. Portland, Ore. and its surrounding towns own eighth place. An average rent of just $1,391 pulls in Millennials. They are up 34.25%, and some 31% of median income goes to rent.
In ninth place is a surprise - Clarksville, which straddles Tennessee and Kentucky. The fifth largest city in Tennessee, the population is around 140,000. Here’s the eye-popper: average rent for a three bedroom is $1,035, the lowest on the list. That’s 25.10% of household income, second lowest on the lst. Bargain hunting Millennials head here. Their population grew 30.56% in 2007-2013.
Tenth place was nabbed by Washington, D.C. - giving that region three of the top ten slots. Average rent is $1,951, which is 34.37% of household income. Millennial population rose 30.40% in the period.
You want to know the worst places to rent? RealtyTrac parses those numbers too, and topping its list is the Bronx, New York, where it takes 68% of median income to rent. Buying is worse. It takes 83% of median household income to buy in the Bronx.
Next worse is Washington, D.C. neighbor Baltimore, where it takes 50% of household income to rent - but an attractive 17% to buy.
Philadelphia finishes third in the losers race. It takes 47% of household income to rent in the City of Brotherly love.
Then Brooklyn - aka Kings County - takes a beating. It places fourth worst because 47% of median household income is needed to rent.
Miami closes out the list. You’ll need 46% of household income to pay the monthly rent and that is too much.
Now you know where to move...and where to flee.
—Written by Robert McGarvey for MainStreet