TheMReport

TH E M R EP O RT | 57 O R I G I NAT I O N S E R V I C I N G A NA LY T I C S S E C O N DA R Y M A R K E T ANALYTICS THE LATEST Fewer Millennials are Living Alone Rising home prices and unaffordable rents are keeping them at home longer. F ewer millennials are living alone than in recent years, and the number has been dropping for a decade, according to according to a recent Zillow re - port on living trends among 23- to-34-year-olds. Across the U.S., almost 9 percent of millen- nials live alone, a number that's been declining since 2005, likely due to unaffordable rents and rising home prices, Zillow reported. Consequently, millennials choose to live with their parents or find roommates. Zillow found that between 2000 and 2013, the number of millennials living with family increased 46 percent. Similarly, 21 percent of millennials across the U.S. are still living at home with, "proving that living with friends or family may be one of the ways to afford housing in some of the nation's hottest mar - kets," the report stated. However, all is not evenly distributed. Some markets are seeing a definite rise in millen - nials moving out on their own. Richmond, Pittsburgh, and Buffalo have the highest percentages of millennials living on their own, 15, 14, and 14, respectively. Zillow cred - ited Richmond's strong labor market, where employment is up almost 4 percent over the past year, and relatively high incomes among millennials, averaging $49,500, as keys to their independence there. In Oklahoma City, 13 percent of millenni - als live on their own, with a median income of $40,000 a year. "At this salary, they are able to afford almost 22 percent of homes," Zillow reported. In San Antonio, 10 percent of millennials live alone, but the average millennial salary of $48,000 allows them to afford the biggest share of homes on the market, 28 percent. Conversely, almost the same percentage of millennials in Detroit make an average $36,000 a year, and that gives them access to the least share of housing, a mere 1.4 percent. "With home prices and rents rising as fast as they are, it's a common assumption that young adults in many cases cannot afford to live alone," said Zillow's Chief Economist Svenja Gudell. "Though that may be true in some markets, there's still a large number of amazing places across the U.S. that are prime for millen - nials to thrive independently." Still, Zillow predicts that house values across the nation are up 5 percent over the past year and rents are up almost 3 percent, leading the company to forecast that rents will increase another 3 percent by this time next year, making it difficult for millennials to live on their own. Lower-Wage Earners Spend Larger Share on Mortgages Low-income buyers spend more than 30 percent of paychecks on house payments—even on the lowest-priced homes. L ow mortgage rates may be enticing new home- buyers, but Zillow re- ported recently that not everyone is able to easily keep up with their payments. Zillow's latest monthly analysis report found that mortgage pay - ments are least affordable for low- income earners, who can expect to spend more than 30 percent of their paycheck on house payments and nearly 23 percent of their income on a mortgage payment in a third of large U.S. markets. By comparison, middle- and high-income earners can expect to pay 15 to 11 percent on mortgages, respectively. "Lower earners carry a heavier burden when it comes to making monthly payments," the report stated. "Their incomes have been largely stagnant, while low-priced homes are gaining value fastest." For perspective, there are pre- crash numbers to consider. In 2007, low-income earners could expect to spend nearly 40 percent of their income on housing. By contrast, high earners barely broke 20 percent when they hit their peak expenditure ratios in 2006. History aside, the burden on lower earners in some states is growing. Low-income earners in most large California markets, for example, are effectively priced out of buying a home. Los Angeles is particularly taxing on low-income earners. Homeowners there can expect to pay three-quarters of their income on mortgage payments, the report found. San Jose and San Francisco were hardly friendlier to low earners, who could be paying about 70 percent of their income on mortgages. By contrast, high- income earners in these markets are paying in the still-hefty 30 percent area. "Housing affordability is a different story for low-income Americans than for median and high-earning people," said Zillow Chief Economist Svenja Gudell. "They are spending much more of their income on housing, even when they buy the least expen - sive homes. On top of that, we know that the least expensive homes are gaining value the fast- est and are the most scarce, mak- ing it hard to find a home to buy even if you can afford one." The friendliest metros for low-income earners are Detroit— which also showed the most even income-to-mortgage ratios across all three earning tiers—and St. Louis. In Detroit, income earners from low to high can all expect to pay around 10 percent towards a mort - gage. Meanwhile, low-income earn- ers in St. Louis can expect to allot about 14 percent of their incomes to mortgage payments; middle and high earners can expect to spend 11 and 9 percent, respectively. "From a high-level view, mort - gage affordability looks pretty good across most of the country," Gudell said. "But it's not good for everyone."

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