Should Chicago Millennials Buy or Rent?

According to a recent Nielsen report, those aged 18-36 make up 24% of the population, meaning that there are currently just as many millennials as there are baby boomers. That's right - The Nicktoon generation can now give their parents a run for their money.

Quite literally. 

As this group begins to establish careers and families, it's choosing smaller cities over the suburbs, creating a seismic boom on the housing market within metropolitan communities. 

In many of these areas, renting is a much more realistic option for millennials. While rent costs are rising rapidly at a national average of 3.5%, property expenses continue to cost more.

Chicago, on the other hand, paints a slightly different picture.

The General Housing Market

The latest national housing market index published by Florida Atlantic University and Florida International University shows renting as the superior option. With a median income of $25,000, renting makes more financial sense for millennials in high-demand, socially-conscious areas like Dallas, Austin, and Portland. 

The hard news for millennials in these expanding areas, however, is that areas in rent territory are not ideal for home purchases. Millennials that eventually want to purchase homes will need to save for this process, which might mean paying less in rent and could result in reversal of growth within these trendy areas with big rental price tags. In turn, housing demands would shrink, along with property values, creating a no-win situation for current homeowners. 

It's easy to see these numbers at work through the Beracha, Hardin, and Johnson "Buy vs. Rent" housing index. This survey conducts a "horse race" that shows a comparison between an individual buying a home and renting a place of similar value while investing the money of homeownership elsewhere across major urban areas. While the recession brought forward a pro-rent housing marketing, the race between buying and renting is currently close to neck-and-neck.

The Chicago Exception

But, while these "urban burbs" continue to experience growing pains, Chicago's popularity remains steadyForbes found that the Chicago population aged 20-29 has stayed about the same over the course of the new millennium.

While this stability is certainly not the only factor deciding the "rent vs. buy" battle for millennials, it does influence home buying's superiority in Chicago. Our fair city was one of four listed as a strong buy territory on the national housing market index. Historically, buying a home in Chicago is a secure path to wealth accumulation, because demand and values remain steady. 

Ultimately, this means that millennials should consider saying "yes" to buying a home in Chicago. There are plenty of resources and guides for buying a new home, and it can be the next step in establishing a healthy financial trajectory.

When you're ready to dip your toes in the housing market, drop Real Group a line, and we'll help you find a new place to call home. 

Real Group Real Estate

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