Recent research from Abodo has revealed a surprising housing trend: Greater Philadelphia is the #5 region where millennials still live with their parents. In the average American city, 34.1% of 18-34 year olds either remain or return home. In Philadelphia, 41% do.
This is significantly higher than most of the country, and Philadelphia’s “millennial magnetism” could be partially to blame. While it seems that the rapid growth has somewhat stabilized, a significant 31% of the city’s population falls into this demographic.
One important reason – which isn’t likely to change anytime soon- is the prevalence of colleges and universities. With more than 100 higher ed institutions in Greater Philadelphia, thousands of students flow into the city each year. After graduation, many being offered full-time positions.
Once they become employees in lucrative Philadelphia industries like healthcare or financial services, they not only have the means to afford a rental; they have no choice. Without family in the area, transplants are forced to rent, buy, or relocate, regardless of income or student debt.
The median monthly income for millennials who live at home on the other hand, is currently $1,427; the median monthly rent they would face? Around $1,026, a whopping 74% of their income.
For this reason, many natives have chosen to save money at home, but two promising economic trends show that it could be time to leave the nest.
First, the Bureau of Labor Statistics confirms that Philadelphia unemployment is dropping. Though higher than the American average by a percentage point, our unemployment rate has dropped to an encouraging 5.9%. On top of this, 27,600 new jobs were created from February 2016 to February 2017.
According to Lauren Gilchrist, JLL VP, Director of Research for Philadelphia, there may be even more good news. While Abodo’s findings show that many millennials have been priced out of the market, we are nearing the end of the apartment cycle meaning rents could soon stabilize.
For millennials who want to leave the nest, this bodes well. With the possibility of higher incomes and lower rents on the horizon, it may not be long before an unanticipated pocket of demand hits the market.