Baby boomers often reminisce on times when they could grab a baseball mitt and go outside to play with the neighborhood kids, but those days are far behind us; nowadays, millennial parents have to pay a hefty bill if they want their child to have a friend next door. Home values are growing fastest where the highest share of kids are, reflecting the impact millennial house hunters are making on family-friendly neighborhoods.
“As millennials go, so goes the housing market, and we are seeing now, as millennials age, that they are looking for homes that fit the needs of growing families,” said Zillow economist Nicole Bachaud. “Millennial demand has helped push up home prices in areas with the most children. Competition for homes in these family-friendly areas should intensify in the coming years as more millennials reach the key age of 32, adding to the affordability squeeze.”
The top 10% of ZIP codes with the largest share of kids in each county saw an average of 21.3% growth from October 2020 to October 2021. In ZIP codes with the smallest share of kids, home values increased by 17.6% year-over-year. That trend began showing in 2013, which was the same year many millennials turned 32 – the age many new parents buy their first home. That’s also the median age of first-time home buyers and one year older than the median age of fathers with newborns.
Zip codes with more residents under the age of 18 years old are associated with higher home value growth in nearly two-thirds of the counties studied. This does not hold true for vacation destinations, though. Home value growth in these family-friendly neighborhoods began to outpace other ZIP codes in 2013, and the correlation between kids and home value growth have been nearly perfect for each year since 2017.
The eldest millennials lucked out on a huge discount when home prices plummeted from the Great Recession. These same family-friendly areas were the hardest hit between 2008 and 2011, in the midst of the nationwide housing crash. However, today’s millennials home buyers are facing a much different market, especially since overall home price growth skyrocketed throughout the pandemic.
Meanwhile, the amount of millennials reaching home buying age has snowballed over the past nine years, and now Zillow analysts are predicting an avalanche. Nearly 200,000 more Americans will be turning 32 this year than in 2021, the biggest jump since the transition from Generation X to millennials in 2013. Even more Americans will be turning 32 years old in 2023.
This growing demographic of young families should fuel even faster price growth in family-friendly ZIP codes within the next two years, which makes saving up for a down payment even more difficult.
This effect is strongest in counties that encompass the cities of Norfolk, Virginia; Washington, D.C.; Portland, Oregon; Austin, Texas; and Seattle. Counties where this trend does not hold true include those encompassing Galveston, Texas; Santa Barbara, California; and Ocean City, New Jersey.
