Valley attracting millennial homebuyers
Affordability, low unemployment rates, amenities driving interest of families
When Hess’s Department Store went out of business in January 1996, Ian Riccaboni had just turned 9 and was a student at Harry S Truman Elementary School in Salisbury Township. When Bethlehem Steel succumbed to bankruptcy in 2001, he was barely a teenager.
Those are his memories of what Allentown, Bethlehem and Easton used to be; today is his heyday.
“This is the first time I can consciously remember it being alive,” he said.
Even though he moved out of the area after graduating from Salisbury High School, he said, it was a no-brainer to return to the Lehigh Valley to buy a home with his family, which now includes two tots.
Millennials as a whole seem to be following suit. When they started leading the homebuying pack a couple of years ago, a new study shows, they didn’t move to big concrete jungles, but rather to smaller, relatively affordable cities where employment prospects look a little more positive.
These include two Pennsylvania metros: the Lehigh Valley and its Scranton-area northern neighbors.
The Allentown-Bethlehem-Easton metropolitan area ranks sixth among markets with the most millennial activity, according to mortgage purchase data compiled by Realtor.com. The Scranton-Wilkes-Barre-Hazleton area is third. The rankings are based on how many millennials bought mortgages in the third quarter of 2019 and how much that cohort grew since last year.
The Pennsylvania areas join cities such as Minneapolis-St. Paul (10th); Rochester, New York (seventh); Colorado Springs, Colorado (fifth); and Grand Rapids, Michigan (first), where millennials comprise nearly 60% of loan purchasers. In this study, millennials are those born from 1982 to 2000.
What do these markets have in common? Taken among the 100 housing markets studied,
they tend to be about half the size of the average metro, have significantly lower unemployment rates — by almost a full percentage point — and, as a result of the higher mortgage activity, higher homeownership rates among the 25-34 age bracket.
A work opportunity brought 24-year-old Carmen Collado and her husband to Allentown from Union County, New Jersey, in May. But she said they’ve found the housing market affordable enough — if still very competitive — to search for their first home and stay to raise a family.
“I was surprised to see how affordable it was to buy a home here,” she said, compared with tax-heavy New Jersey.
Amid their search in places such as Whitehall Township, Emmaus and Quakertown — 10 or so homes, so far — they’ve bumped into other young couples.
Millennials bought 51% of the mortgages in the third quarter this year in the region, an increase of 7% from this time last year. The Scranton area has a larger millennial cohort — 55% of loan purchases — though a smaller increase from last year, 5%.
In the Lehigh Valley metropolitan statistical area — which includes Lehigh and Northampton counties and Warren County, New Jersey — people aged 25 to 34 comprised the second largest population group in 2018, 12.2%, next to 45- to 54-year-olds at 13.6%, according to the census.
Anecdotally, millennials want places where they can live relatively close to work while still having a healthy dose of outdoor recreation nearby.
“They’re still looking for an oasis when they get home from work,” said Michael Bernadyn, an Allentown agent with Re/ Max. “We have a lot of amenities in short drives.”
In the Lehigh Valley, millennials can live right next to the D&L rail trail and commute less than 20 minutes to a major hospital network for work.
They can also reach major metropolitan areas in an hour or two.
Jillian Rossi, 28, considers herself a city girl at heart, visiting Manhattan a couple times a month. But she still wants her privacy, a yard for her dog and an affordable cost of living.
“We were able to get much larger bang for our buck,” splitting a duplex home with her mother in Bethlehem Township in September. “I think the Lehigh Valley’s just a really good middle point.”
In his decades in the business, Carl Billera, president of the Greater Lehigh Valley Realtors association, said he’s always pointed to the Valley being “ideally located” as a prime draw. For millennials, add in the revitalized downtowns, entertainment options and a growing brewery and distillery network.
Rossi, who founded and manages The Swingtime Dolls — a female vocal group reminiscent of The Andrews Sisters — says the music and arts scene has bloomed in the last decade.
Growing amenities mean millennials don’t have to venture to larger cities for the same thrills. Riccaboni, who moved his growing family from a Philadelphia suburb to Salisbury Township two years ago, can take his toddlers to see Paw Patrol at PPL Center; instead of going to the Franklin Institute in Philadelphia, they have yearly passes to the Da Vinci Science Center in Allentown.
“It was kind of an easy choice,” he said. “For what we were paying in Glenside, we were able to have a nice yard and be close to parks and nature trails, and be in a solid school district.
“This was a place we could see our family growing,” he said. And it’s where he said he wants to retire.
On average, the median listing price in these millennial markets was only 1% higher than the nation’s median listing price of $312,000, according to Realtor. com’s analysis.
“We were able to get much larger bang for our buck. I think the Lehigh Valley’s just a really good middle point.” — Jillian Rossi, who bought a duplex in Bethlehem Township
This, however, accounts for a fairly wide range in listing prices, from more than $427,000 in Colorado Springs to less than $160,000 in Scranton. The Lehigh Valley’s median listing price was about $225,000 in October.
Because these markets are topping the demand charts, housing inventory has suffered more acutely than in southern and western states. Housing inventory in the Lehigh Valley was less than 1,700 units in October, down 26% from the previous year, according to GLVR data.
The study notes that means the desired home price will continue to feel out of reach for millennials, who are often firsttime buyers and still put, on average, the lowest down payment on their homes.
Generation Xers, on the other hand, are seeking out big cities, where homes list for about 30% more than the national average and the share of those sales tilt fairly heavily toward investors. These include the likes of several California metros, as well as Louisville, Kentucky (fifth); and Memphis, Tennessee (first).
The top markets for boomers are mostly sunny, warm and retiree-friendly, smaller metros in lower-tax states and with lower median home listings. These include Tucson, Arizona; the Spokane Valley in Washington; several metro areas in Florida; and the Honolulu area.