• The metro areas attracting the largest shares of millennial movers are also those with the lowest unemployment rates.
• The most popular areas for millennial movers generally do feature relatively expensive for-sale housing, but not necessarily expensive rents.

In recent years, a popular narrative has emerged that young adults are flocking en masse to the nation’s trendy, diverse, dense—and expensive—urban centers. The popular image is of millennials passing their worry-free evenings on hip Brooklyn rooftops, spending an absurdly large portion of their already meager incomes on rent, which makes saving to buy a home more difficult and dooms them to rent for ever-longer periods.

And in some ways, this is true. Unburdened by the traditional hallmarks of adulthood—think things like children and mortgages—young adults are generally more mobile than older adults and more likely to move long distances for school, love, lifestyle or just a change of scenery. And while the overall share of American adults undertaking a long-distance move has been falling in recent years (although not as much as many people think), the migration rate among young adults remains consistently above that of older adults. In 2011, 7.2 percent of millennials residing in a metro moved to a different metro, compared to 1.6 percent of Baby Boomers.[1]

But a closer look at the data suggest that the popular interpretation of the millennial experience is also flawed. Zillow’s analysis of U.S. Census data suggest that while millennials may be moving to some places because they are hip and happening, there’s also an eminently more practical reason: those places are also where the jobs are.

There is a strong inverse relationship between a given area’s unemployment rate and its share of millennial movers, with millennials representing a larger share of movers to metros with lower unemployment (Figure 1). There are outliers, of course. Miami appears to be attracting a relatively small share of millennial migrants given its level of unemployment, similar to Las Vegas, Tampa, Phoenix and Richmond. At the other extreme, Chicago, New York and San Francisco appear to be punching above their weight, attracting relatively large shares of millennials even though unemployment in those areas is fairly high.

And it is true that in many of these places (though not all), buying a home is very expensive. But the relationship between where millennials are moving and the affordability of rental housing is less clear.

There is, at best, a very weak relationship between the share of all millennials (aged 23 to 34) who have moved to a given metro area, and the portion of income the typical renter in that area dedicates to rent (Figure 2).[2] Among those metros attracting a large share of millennials, rents are very unaffordable in several, including San Francisco, New York, San Diego and Los Angeles. But in others, rents are relatively reasonable by historical standards, including markets like Chicago and Dallas.

There are also some conundrums. Places like Miami (again), Las Vegas and Phoenix should probably be attracting larger numbers of millennials given their relatively affordable rents, but aren’t. In some of these places, particularly Florida and parts of the Southwest, older movers might outnumber younger migrants in the data.

But while the statistical relationship between millennial movers and rental affordability is not very significant, it is very clear that millennials are moving to metros where buying a home is extremely expensive. There is a strong relationship between the millennial share of movers to a given area and its price-to-income ratio—the ratio of the median home price in a metro and the local median income (Figure 3).

So, for now at least, the kids are probably alright (contrary to popular opinion). Many millennial movers may not intend to buy a home in the near term, and so don’t mind living in metros where it’s expensive to buy a place. Those moving to expensive places may also expect to see their incomes grow significantly in coming years as a result of moving to these places, so the professional pros outweigh the housing cons.

In the end, it is unlikely that high home values are what is ultimately attracting or repelling millennials to and from these metro areas anyway. Rather, a more likely scenario is that metros with strong economies also have strong employment growth, which in turn attracts new workers, creates demand for housing and leads to stronger housing markets.

Methodology

To calculate millennial share of movers to a metro, we first identified households that moved to that metro from a different metro, then estimated the share of households headed by a millennial and number of such households moving to a metro. The trend line on each scatter plot is weighted by the number of households moving to a metro. Metros without 25 or more millennial, Generation X or Baby Boomer movers in the un-weighted sample were dropped from this analysis.

[1] Zillow analysis of data from the U.S. Census Bureau’s 2012 American Community Survey made available by the Minnesota Population Center. Steven Ruggles, J. Trent Alexander, Katie Genadek, Ronald Goeken, Matthew B. Schroder, and Matthew Sobek. Integrated Public Use MIcrodata Series: Version 5.0 [Machine-readable database], Minneapolis: University of Minnesota, 2014.

[2] Movers are defined as a household that resided in a different metro in the past 12 months. Some metros were excluded from the analysis because of sample size. Some metros, most notably Boston, were dropped because of identification problems. Denver, Boulder and Greeley, Colo., were combined into one metro.