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Millennials are flocking to cities where they may never be able to afford a home

CNBC logo CNBC 9/29/2018 Shawn M. Carter
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Young people in the U.S. are flocking to cities where eye-popping real-estate prices mean they may never be able to afford to buy a home.

More than 12,000 millennials moved to San Francisco's Castro ZIP code, for example, where the median home costs more than $1.9 million. Nearly 2,500 moved to New York's Battery Park City, where median home values are similarly high. Meanwhile, 67 percent of millennials have less than $1,000 in savings and 46 percent have nothing saved at all.

Using data from Zillow, CNBC Make It identified median home values for the top 10 places RENTCafé determined that millennials are moving. While housing prices are close to the medianin a couple of these places, they're above the national median in eight of the 10 ZIP codes. And in three of the 10 ZIP codes — located in notoriously pricey states like California and New York — typical homes can cost well over $1 million.

Here are the top 10 places with the largest increase in millennials and the median home values there:

Los Angeles

Neighborhood: Downtown, 90014

Percent of millennial increase: 91.4

Number of new millennials: 3,000

Median home value: $533,500

Los Angeles

Neighborhood: Downtown, 90013

Percent of millennial increase: 60

Number of new millennials: 4,700

Median home value: $567,200

New York City

Neighborhood: Battery Park City, 10282

Percent of millennial increase: 54.5

Number of new millennials: 2,300

Median home value: No Zillow data. Real-estate website Redfin lists the average home sale price over the last month at $825,000.

Portland, Oregon

Neighborhood: Kerns / Laurelhurst, 97232

Percent of millennial increase: 51.8

Number of new millennials: 5,700

Median home value: $600,700

New York City

Neighborhood: Lincoln Square, 10069

Percent of millennial increase: 47.7

Number of new millennials: 2,200

Median home value: $1.9 million

Jacksonville, Florida

Neighborhood: Riverside, 32204

Percent of millennial increase: 45.3

Number of new millennials: 3,000

Median home value: $194,600

Los Angeles

Neighborhood: Mid-Wilshire, 90048

Percent of millennial increase: 38.9

Number of new millennials: 10,300

Median home value: $1.7 million

Philadelphia

Neighborhood: Kensington, 19125

Percent of millennial increase: 37.4

Number of new millennials: 11,200

Median home value: $265,000

San Francisco

Neighborhood: Castro, 94114

Percent of millennial increase: 37.4

Number of new millennials: 12,500

Median home value: $1.9 million

Washington, D.C.

Neighborhood: Southwest Waterfront, 20024

Percent of millennial increase: 37.2

Number of new millennials: 5,100

Median home value: $403,300

To generate its national rankings, RENTCafé looked at ZIP codes with total populations of over 600,000 residents. To generate its rankings by state, researchers analyzed ZIP codes in the 250 largest U.S. cities. ZIP codes with less than 1,000 millennial residents were eliminated, as were ZIP codes that overlapped with University Campuses and U.S. Military Bases or those that contained penitentiaries and correctional facilities.

About half of those born between 1980 and 1995 still rent, according to one recent study, because expenses like student loan debt and expensive down payments can make it hard to afford a home. The extravagant cost of renting, especially in trendy cities, makes it even harder to save.

Data from Apartment List in 2017 showed that, although 80 percent of millennials would like to purchase real estate, very few are in a good position to buy, largely because they have nothing put away.

Given their current savings rate, millennials are 10 years or more away from home ownership, especially in more popular cities, Apartment List concludes. Young residents of pricey San Jose, California, will have to be exceptionally patient: Odds are they won't be in a good position to buy an apartment there for "almost 24 years."

Since housing prices and the cost of living can vary widely based on where you live, it's good to plan ahead. If you're looking to buy a home, be sure you're ready to transition from renting and consider some of the markets where homes are most affordable for millennial buyers. Southern and Midwestern towns tend to be good bets.

And if you're going to continue to rent, check out these budgeting hacks, credit card tips and other ways to save.

Don't miss: This is the No. 1 source of financial stress in DC—and it's not taxes or the high cost of housing

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