In praise of Midwest real estate
It is a truth universally acknowledged that American millennials can't afford to buy houses. Fully nine in 10 of this generation — the eldest of whom are now pushing 40 — want to own a home, but fewer than four in 10 do, a lower ownership rate than that of previous generations at the same age. There are plenty of explanatory factors here, and reasons like delayed marriage and high student loan burdens are not to be lightly dismissed. But at least as significant is the price of housing itself. "Nationally, the gap between income and home value has been rising," explains a recent report on millennial homeownership at The Atlantic, so much so that "it took nine years to save up a down payment in 1975. Now it takes 14."
But as the Atlantic story notes, that timeline isn't uniform nationwide. In coastal cities like Boston, New York, and Washington, D.C., it takes around 30 years "to save up a 20 percent down payment on the median home in a given city by squirreling away 5 percent of the city's gross median income per year." The West Coast is even worse: You'd have to save for 40 years in San Francisco or 43 in Los Angeles. Your retirement party might be the first celebration in your own home, and with a 30-year mortgage, only those who make it to their 90s can expect to die debt-free.
These ludicrous housing markets happen to be home to most national media, and the prices are legitimately shocking, so it's no surprise they get a lot of attention. Yet if we look a little farther from the coastline, the market is dramatically different. Out here in the middle, millennial homeownership is totally doable — even with student loans, delayed marriage, and the like. You can own a home before 60. You just have to move to the Midwest.
Cedar Rapids, Iowa | Metro area population: 250,000 | Median household income: $51,000
I speak from personal experience and also an undue fascination with real estate for someone who is not house shopping or selling. My husband and I purchased our home in the Twin Cities in 2014. We lucked out by catching the tail end of post-recession low housing prices, but homeownership remains attainable here today. Nearly all our friends — including couples where only one spouse works, one or both are in college, one or both have significant student loans, or both only work part-time — have bought their own houses.
Topeka, Kansas | Metro area population: 550,000 | Median household income: $43,000
Granted, we're probably not purchasing at the median home price for our metro area. We're buying smaller, older houses that are in the city proper, not the pricier suburbs, and not the trendiest or fanciest neighborhoods. We're getting kitchens that are functional but outdated, maybe outright shabby. Most of our houses only have one bathroom. The floors squeak. The yards are scruffy. But they're ours! And they can be ours without 30 or 40 years of scraping together enough for a down payment (or borrowing from mom and dad).
Steelton, Pennsylvania | Metro area population: 230,000 | Median household income: $41,000
The Twin Cities are not unique in this regard. There is perfectly affordable real estate all across the Midwest — in fact, all across most of America outside the largest and most expensive cities on the coasts and in a handful of booming inland markets like Chicago and Austin. Granted, there are tradeoffs. It goes without saying that you will have more job opportunities in New York than Minneapolis, or in Minneapolis than, say, New Richmond, Indiana, population 333. But in New York $50,000 gets you nothing; in Minneapolis it gets you a total rehab project or an empty lot, and in New Richmond it gets you 2,000 square feet of gorgeous Victorian woodwork on a quarter acre with central air, multiple porches, an elaborate fireplace, and a clawfoot tub.
You don't have to go to such a tiny town to be able to buy a home in your 20s or 30s. There are plenty of intermediate options with a nice balance between affordable housing stock and a reasonably lively job market. (Remote work, of course, provides maximum flexibility. If your job is entirely remote, you can move somewhere like New Richmond, if taste or proximity to family or whatever make that an attractive choice.)
Cincinnati, Ohio | Metro area population: 2.1 million | Median household income: $61,000
One of my favorite Instagram accounts is called Cheap Old Houses, and it's exactly what it sounds like. The account manager, Elizabeth Finkelstein of Circa Old Houses, scours real estate listings nationwide to showcase gorgeous older homes for $100,000(ish) or less. Predictably, listings in coastal areas are rare — but in the Midwest and other more central states, options abound. Peppered throughout this article are a few of my recent favorites in decently sized metro areas with median incomes that can responsibly support a home purchase at this price point.
Cedar Rapids, Milwaukee, and Cincinnati aren't San Francisco, but neither are they ghost towns. You can have a job and a house and some non-Netflix nightlife in these places. Liz Lemon told us years ago: Cleveland! Even we blighted millennials can afford a home in the Midwest.