The pandemic has put homeownership out of reach for many millennials struggling to afford rent. So it's no surprise that sky-high prices and low supply in big cities have many younger buyers packing their bags for small towns.
Researchers from the financial services company Legal & General Group polled 875 U.S. adults ages 25 to 40 about how the Covid-19 crisis has affected their money and ability to buy a home in an area where they truly want to be.
Six in 10 millennials already live in a large metropolitan area with 1.5 million or more people. But of those, most said homeownership where they live is "hard" or "extremely hard" to afford.
There's a "surge of people moving to suburban areas because they see how difficult it is to find a house" in the city, says Ryan David, owner and CEO of We Buy Houses In Pennsylvania. "Once they find one, they make the quick decision because they know if they don't move to the place they want now, they might not get another chance to relocate for a long time.
While nearly half of the poll-takers — particularly older millennials and those in big cities — are happy with their current location, 37% want to move to a smaller town to cut down on costs. Two-thirds of those who want to relocate currently live in cities with half a million inhabitants or more.
Affordability is the strongest driver to move for people in large metropolitan areas, with 27% pointing to it as a factor. And 36% of parents and those already saving for a down payment are looking for smaller cities and towns.
They aren't wrong about the savings potential. Look at the cost of housing in coastal San Francisco versus a more rural area like Rocheport, Missouri. Median homes in the Bay Area are valued over $1.5 million, according to Zillow, while a Rocheport home could cost less than one-quarter of that, at around $327,700.
Video by Helen Zhao
It can be hard to save for a home in a big city while juggling other expenses. But if you plan to relocate to save and boost your chances of buying property, make sure your new town fits your budget and lifestyle. Even if housing is cheaper, differences in taxes and other expenses could offset those savings.
Try renting in the area before making any buying decisions. "You should be prepared to rent for 1 to 3 years," or until you are happy with your choice and financially prepared for homeownership, says Janet Stanzak, a certified financial planner and founder of Financial Empowerment. Plus, "it may take that long for home prices to come down."
There are many people choosing to move to lower-cost places since they can work remotely, Stanzak says. If you're already employed, find out if your job will let you work a hybrid or fully remote schedule. And if you're hunting for a new role, check out the local job market for new listings that could work for you.
If all the pieces line up and a move seems like a practical and fruitful decision, she says, "Why pay high living expenses when you can move to somewhere you'd rather live that's less expensive?"
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