By Ali Wolf
July 26, 2023
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Millennial and baby boomer movement patterns are vital to understanding the groups' impact on the economy and housing
The barbell of demographics, millennials and baby boomers, are economic powerhouses. Millennials are key to the economy given their sheer size, and boomers are critical given their overall wealth. As such, movement patterns for these groups are important to help understand the impact on the economy, competition for resources, and housing.
Baby boomers are often the parents of millennials, and, where one of these groups moves, the other sometimes follows. A recent Zonda survey shows roughly 25% of baby boomers plan to retire in a location near their grandchildren. Further, United Van Lines lists the following as the top three motivations to move: a desire to be closer to family (35%); a new job/company transfer (33%); and retirement (20%).
A new job/company transfer is particularly impactful for millennials as they are in their prime working years. They often prioritize job availability in their relocation decisions.
When looking at the top locations for the most high-income job growth since early 2020, Austin, Texas, leads the way with 29% high-income job growth, followed by Dallas and Raleigh, North Carolina, both at 18%. Traditionally more attractive cities like New York (2% growth), Los Angeles (2%), San Francisco (3%), and Chicago (2%) have less growth than some of their southern counterparts.
Beyond employment growth, widespread work-from-home optionality has enabled more migration than was previously feasible. For example, I recently met a baby boomer on a plane who had moved from California to Columbus, Ohio, to be near her millennial children and her grandchildren. She said she had thought about moving for years but was never able to because she went into the office every day before the pandemic. Since moving, she has gained more family time in addition to an unintended benefit: She was able to convert from a renter to an owner because of the cost-of-living differential.
Zonda’s Baby Chaser Index was created to capture this interconnectivity between the two demographic groups. The index tracks where there’s the most overlap in migration between baby boomers and millennials across the country. The “baby chaser” naming relates to the boomers' desire to be close to their grandchildren.
The latest index for 2022 shows:
Austin landed as the top market for the second year in a row. Despite some uncertainty in the tech sector, the Texas capital continues to attract younger folks. The rate of growth in Austin among millennials is 27% above 2019 levels. Dallas and San Antonio also landed in the top 10 this year, while Houston ranked No. 11.
Orlando, Florida, No. 3 on our list, benefited from a year-over-year migration boost from both millennials and boomers.
The two largest metros in North Carolina, Raleigh and Charlotte, fell within the top five of our index.
Nashville, Tennessee, moved up two spots year over year to No. 6. The city wasn’t in the top 10 in 2020.
Phoenix moved down the list from No. 5 to No. 10, driven by slower boomer migration.
Every baby chaser market in 2022 was in either the Southeast or Southwest.
Austin: Employment Growth Has Contributed to Population Growth
Austin was the top baby chaser market again in 2022. Over the past five years, Austin has placed first three times (2019, 2021, and 2022).
The strong migration is tightly related to Austin’s strong job market that was ranked first in total job growth and high-income job growth in our large metro area analysis. The local economy is fueled by technology companies (Samsung, Apple, IBM, Dell, and Amazon), health care (Ascension Seton and St. David’s HealthCare Partnership), education (University of Texas at Austin), and the state of Texas.
Another attraction, according to Zonda Advisory senior vice president Bryan Glasshagel, is affordability for many out-of-state buyers. Boomers following their children from more expensive markets see Austin as a relatively affordable area. According to Realtor.com, the top five out-of-state searches came from Chicago, Los Angeles, New York City, Phoenix, and Washington, D.C. Movers from these metros can often use substantial built-up equity to fund relocations.
Glasshagel also highlighted that Austin has numerous recreational amenities, including the Hill Country, lakes, outdoor activities, a variety of cultural happenings, and a good food scene. People have been drawn to the market for jobs and relative affordability, but they stay for the lifestyle.
Raleigh: Universities Help Attract and Retain Buyers
Raleigh has similar advantages to Austin, according to Zonda Advisory vice president Shaun McCutcheon. The strong supply of universities in the region often serve as the starting point for many out-of-towners. After college, many graduates stay in the area due to the strong job market with particular strengths in education, health care, and technology.
In Raleigh, Apple announced a new facility is in the works, but McCutcheon says a more immediate strong driver has been Fujifilm’s new manufacturing plant in nearby Holly Springs.
Other big job announcements include railroad car manufacturer TTX moving its headquarters to Raleigh, VinFast opening an electric vehicle manufacturing facility in Chatham County, and ProPharma moving its headquarters to downtown Raleigh.
Raleigh, like Austin, attracts out-of-state buyers. Realtor.com finds that 50.8% of the searches for Raleigh real estate come from outside the state, led by New York City, Atlanta, and Washington, D.C.
McCutcheon notes that many Northeastern buyers, in particular, are able to make all-cash purchases in Raleigh despite the nearly 60% existing-home price growth since the start of the pandemic. Out-of-town buyers generally bring equity and are less sensitive to home prices and interest rates than local buyers.
Raleigh also offers a nice quality of life with a fairly temperate climate and plenty of things to do. It’s a reasonable drive from staycation getaways, including the mountains and the beach, and has broader accessibility with its midsized airport.
Orlando: Market Offers Nostalgia and No State Income Tax
Orlando’s central location is appealing across both demographic cohorts with recreational activities locally as well as a reasonable drive both east and west to the coasts, explains Kristine Smale, Zonda Advisory senior vice president.
Further, Orlando’s housing is generally more affordable than other top markets in the state.
Orlando is one of the only metros in Florida that isn’t landlocked, allowing for development across all four cardinal directions. The requirement of flood insurance in Orlando is extremely rare as well, Smale explains, which stands in direct contrast to some other Florida metros. Both factors are important in maintaining housing affordability.
There are also specific qualities that appeal to different demographics. For baby boomers, Orlando is often a consideration for those thinking they want to “retire in Florida.” The Disney and Universal theme parks helps provide nostalgia and familiarity. For those looking for a 55-plus new-home community, Orlando has the second largest age-restricted supply in the state, according to Zonda data. Boomers interested in such communities often start their search within the well-known The Villages development but sometimes expand their search radius into Orlando depending on their needs.
While Orlando is commonly thought of as a leisure and hospitality hot spot, Smale notes the increase in high-income jobs locally, especially in tech. The metro saw a 42.7% increase in tech job postings from January to October 2022, and the only U.S. market to outpace Orlando’s growth was Houston.
Millennials considering employment in their relocation decision have more jobs to choose from in Orlando while also benefiting from the lack of state income taxes.
Work-from-home options and lifestyle choices, particularly of boomers and millennials, are driving shifts in local economies and the housing market.
Earlier this year we published a look at baby boomers and how they are still pushing the housing market forward despite higher home prices and interest rates. Boomers overtook millennials for the first time since 2014 as the top buyers in 2022. This is partially because boomers and millennials are often competing for the same product, but boomers can pay more and are less sensitive to mortgage rates and home prices given built-up home equity and general wealth accumulation.
Therein lies the challenge in being a top baby chaser market. While migration is good for agglomeration and longer-term growth, the increased population is not without obstacles.
Rising home prices, congestion, and inflation are short-term imbalances in top growth markets that have hindered economic and housing potential in some areas (Austin being the poster child). In the medium and longer term, though, we believe in the sustained desirability of many of these markets given their strong performance in job growth and other solid fundamentals, such as pleasant climates and accessibility to infrastructure.
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