In an examination of whether millennials are helping inner cities experience a rebirth, the authors of ProTeck Valuation‘s Home Value Forecast (HVF) for May determined that while some urban areas with populations dominated by millennials are thriving, urban recovery is still happening slowly nationwide, according to a press release from ProTeck on Monday.
“While millennials’ impact can be seen, the rehabilitation of America’s inner cities does not happen with a broad brush,” said Tom O’Grady, CEO of Pro Teck Valuation Services. “Change comes one building, then one neighborhood, then one ZIP code at a time.”
In order to test the theory that millennials are causing a great migration back to the inner city, the HVF examined urban areas with millennial-dominated populations in two of the top 10 cities ranked by the American Institute for Economic Research (AIER) according to amenities important to millennials and job prospects (Minneapolis-St. Paul and Boston). What the HVF authors discovered was that the two urban areas examined to determine what impact millennials were having, the Lyn-Lake area of Minneapolis and South Boston, have withstood the housing bust and were at all-time highs.
“The Lyn-Lake area of Minneapolis is a vibrant community that embarked on a strategic plan to further engage residents and businesses. South Boston also has seen a transformation over the last few years into a thriving live-play-work space,” the authors wrote. “As we discussed in our September, 2014 HVF update, Market Trends Across the U.S. – How Economic Restructuring Affects Housing Affordability, metros at differing points in their economic restructuring have different affordability. Smart companies are looking at affordability and moving to where there is a large percentage of the population with a bachelor’s degree or higher. Boston and Minneapolis are number 4 and number 7, respectively, on the list and look well poised for future housing appreciation.”
In addition to Minneapolis-St. Paul and Boston, cities mentioned in the AIER research as the most highly educated metros were Austin, Denver, New York City, San Francisco, San Jose, Seattle, and Washington, D.C. Four of those cities, Denver, San Francisco, San Jose, and Seattle, were ranked among the top 10 metros in the latest HVF.
“Educated millennials are gravitating to cities and we believe this is creating an urban revival in many key metros across the country,” O’Grady said.
The May HVF update ranks the 10 best and worst performing metros according to market condition ranking model. The rankings, run monthly for single-family home markets in the top 200 core-based statistical areas (CBSAs), use leading real estate market indicators such as sales/listing activity and prices, months of remaining inventory, days on the market, sold-to-list price ratio, foreclosure percentage, and REO activity, according to ProTeck.
The top CBSAs in April as reported in the May HVF were Seattle-Bellevue-Everett, Washington; Denver-Aurora-Lakewood, Colorado; San Jose-Sunnyvale-Santa Clara, California; Santa Cruz-Watsonville, California; Vallejo-Fairfield, California; Bellingham, Washington; Phoenix-Mesa-Scottsdale, Arizona; San Francisco-Redwood City-South San Francisco, California; Oakland-Hayward-Berkeley, California; and Reno, Nevada.
The bottom CBSAs in April as reported in the May HVF were Baltimore-Columbia-Towson, Maryland; Deltona-Daytona Beach-Ormond Beach, Florida; Elgin, Illinois; Fort Lauderdale-Pompano Beach-Deerfield, Florida;
Gary, Indiana; Kansas City, Missouri-Kansas; Lake County-Kenosha County, Illinois-Wisconsin; Lakeland-Winter Haven, Florida; Memphis, Tennessee-Mississippi-Arkansas; and Rockford, Illinois.
“Seattle joins Bellingham, WA in the top ten this month,” O’Grady said. “Denver, Phoenix and Reno also are in the ranks of the top 10, which have been dominated by California metros such as San Jose, San Francisco, and Oakland-Hayward-Berkeley. All of the metro areas in the top 10 have less than five months of remaining inventory with San Francisco having less than two months. Also, the foreclosure percentage of sales is well below 10 percent in every market.”