Are improving wage trends and a growing local economy better bellwethers for land acq and first-time/entry level neighborhood development planners than mere job growth and cheap housing?
This CoreLogic analysis would suggest it’s so. It’s the work of Bret Fortenberry, a staff scientist with the Decision Analytics and Research Team (DART) at CoreLogic.
Fortenberry’s taps CoreLogic’s Propensity to Purchase model for insight around the next corner as to what will draw Millennials to a housing market, a model that filters for 70 characteristics to determine the “significant discriminators” that place some metro markets at the top of the rankings and some at the bottom.
“A majority of the characteristics suggest that millennials are more likely to buy in counties that have a strong and prospering economy. Additionally, millennials are more likely to buy where they are making more money indicating that areas with an improving job market are where this demographic is more inclined to buy.”
Set aside, for a moment, the correlation vs. causation issue for a moment. There is, we believe, a valuable kernel of truth, and it applies not just to millennials, but to other buyer customer segments and generational cohorts as well.
We’ll take a look at that deeper driver in a moment. Let’s first consider Fortenberry’s chief conclusion, which draws a more than subtle contrast between where millennials are presently drawn to in their homeownership pursuits vs. where they will be looking in the years ahead. He writes:
‘According to the data from the CoreLogic propensity models, there will be a shift in where millennials will purchase homes in the next six months. The shift will move from cheaper areas that border the improving counties to the heart of the improving counties in which the housing market is more expensive. It is possible that this shift is already happening, but we are not seeing the corresponding numbers because of a reduced number of millennials who can afford to purchase homes that are more expensive.
Net, net, Fortenberry asserts, get ready for increased gentrification in affordable submarkets of typically more expensive counties, a trend that will take visible form as “hipster” hamlets.
Thing is, when you solve for age demographics, the economic dynamic is this. Improving salary and future earnings trends are a more powerful impetus than, simply, “affordability.” This is why we’re saying attainability is the more significant term, because it accounts for future earnings as a factor in making homeownership or a given price-range viable.
