NEW YORK (TheStreet) — Young Americans who aspire to own their own homes should forget about high-paying jobs on Wall Street or in Silicon Valley and move to low-cost Akron or Scranton instead, a Zillow.com study finds.
"Markets like Scranton or Dayton or Buffalo just have more lower-priced homes available. You'll usually make a little less income, but these places are a lot cheaper to live in," Zillow economist Svenja Gudell says.
Experts predict the Millennial generation — young Americans who've come of age since the year 2000 — will soon surpass Baby Boomers and Generation X to become America's No. 1 home buyers.
Many 23- to 34-year-olds had to live with mom and dad during the Great Recession, but are beginning to land good jobs and buy or rent their own places as the economy improves.
Still, high home prices and hefty down payments in "hot" housing markets such as San Francisco or New York mean few young people can afford first homes there.
To see where younger workers can pay for housing, Zillow compared median Millennial incomes in America's 96 largest metro areas with how much local properties list for.
Researchers found the worst Millennial affordability in costly California and Hawaii, but the best combination of wages and prices in the Midwest's so-called "Rust Belt."
Gudell says young workers' wages aren't all that bad in the Midwest, while property values are usually low and there are plenty of starter homes. By contrast, investors in cities such as San Francisco have snapped up most of the inexpensive inventory and turned it into rentals, she says.
Sally Johnson, president of Ohio's Akron Cleveland Association of Realtors, says young professionals who move to Akron to work in area hospitals or the University of Akron's cutting-edge Polymer Training Center generally like what they find.
"Almost without exception, they're pleasantly surprised by what we have — not just the affordable housing, but also the parks, the culture and the excellent restaurants," says Johnson, an agent with Stouffer Realty.
True, the average Millennial probably won't find Scranton as sexy Silicon Valley.
But Gudell says those who see homeownership as important should consider such locales all the same. "You might get more money if you move to [Silicon Valley], but you probably won't make enough to afford places," she says.
Look below for a rundown of the five metro areas that Zillow found offer America's best housing affordability for Millennials. (Or, click here for a look at the worst U.S. markets for young buyers.)
Zillow ranked cities based on what fraction of Zillow.com listings young people in a given metro area could pay for using no more than 30% of income to cover their mortgage bills.
The firm calculated median Millennial wages using U.S. Labor Department data for households headed by 23- to 34-year-olds. (Millennials living with their parents didn't count.)
Researchers used Zillow's fourth-quarter 2014 for-sale listings for the analysis and assumed buyers would finance purchases with mortgages that carried 3.98% interest rates. "Median home values" refer to Zillow's estimate of a typical property's worth in a given locale as of April, including residences not actually up for sale.