A near-record number of college graduates are set to walk across that long stage to pick up their degrees and kick off their lives in earnest. But this first wave of Gen Z grads—most born after (gulp) 1996—face some unprecedented challenges on their hops, skips, and jumps to adulthood. It’s a classic good news, bad news story. The good: a supercharged economy with low unemployment. The bad: boundary-breaking levels of student debt, monthly rents, and real estate prices. Yikes!
Choices, choices. Where to start out? Many of the places with the brightest career trajectories, highest-paying jobs, and liveliest social scenes are the same exact places where struggling 20-somethings are going to have to scrape together a small fortune for rent—let alone buying a home. That doesn’t leave much for, um, life. Meanwhile, many cities offering cheap housing also have some of the grimmest professional (and romantic) prospects.
So what’s a new newly minted college grad to do? Realtor.com®’s studious data team found the best cities for new degree-holders that offer just the right mixture of housing affordability, career opportunities, and great dating scenes. Hey, success is lonely without someone to share it with.
“As graduates consider where they should move for that first job, they need to consider if that place has a good level of real affordability,” says Ali Wolf, director of economic research for Meyers Research, a real estate and construction data firm. And more and more, that may well mean passing on ultrapricey cities like New York, Los Angeles, and San Francisco in favor of smaller cities that offer a primo combination of diversified career growth and achievable lifestyles.
Certainly there is no shortage of folks about to make these decisions. At 3.9 million strong, the 2019 class will be the second-largest ever, according to the U.S. Department of Education. For those keeping track, that’s about 1 million associate’s degrees, 1.9 million bachelor’s degrees, 780,000 master’s degrees, and 182,000 doctorate, medical, and law degrees. Phew! The number of undergrads has risen 17.5% in the past decade.
To find out where they should all go, we looked at the following metrics for the 100 largest metropolitan areas* in the country:
- Unemployment rates
- Median income for households aged 25 to 34; incomes for residents with a bachelor’s degree
- Five-year wage growth
- Percentage of college grads, percentage of singles
- Median one-bedroom apartment rents
- Median home prices
- Housing affordability (median mortgage vs. take-home pay, for 25- to 34-year-olds)**
- Number of venues for nightlife, bars, gyms, karaoke, sports bars, and social clubs on Yelp
So, before all those caps get thrown in the air, let’s look at these best markets for those with brand-new diplomas. It’s our graduation gift!
1. Madison, WI
Median list price: $330,000
Unemployment rate: 2.4%
5-year wage growth: 21.1%
Home to the University of Wisconsin-Madison and its more than 40,000 students, Madison has a thriving nightlife and music scene, a surprisingly strong job market, and a reasonable cost of living.
“If you look at a lot of Midwestern industrial cities, their companies aren’t growing much,” says Wisconsin-based career coach Bill McGinnis of Exponential Careers. But in Madison, there are “a lot of start-ups and older companies growing very fast.”
Indeed, SwanLeap, a Madison-based business bringing artificial intelligence to logistics, was named the fastest-growing company in the nation last year by Inc. Magazine.
While Madison’s home prices are a bit above the $300,000 national median, bargains abound. Twenty-somethings with good jobs can score a condo for around $200,000 near downtown.
And it’s not too hard to meet a mate in the city known for its brewhouses.
“Madison has a lot of young residents, which makes finding friends and relationships much easier,” McGinnis says.
2. Austin, TX
Median list price: $360,000
Unemployment rate: 3%
5-year wage growth: 24.2%
It’s not surprising that new grads are flocking en masse to the capital of Texas—it’s an infinitely more affordable tech hub than Silicon Valley, and has way better music and tacos to boot.
Prices within the city limits are high, at a median $545,100. So younger buyers typically head to the surrounding suburbs or nearby, smaller cities. One hot spot is Manor, 20 minutes from downtown. A recently built three-bedroom, one-story home is going for $230,000. The lower price point explains why realtor.com named Manor one of the fastest-growing suburbs.
It’s worth noting, though, that the recent building boom in the area has helped bring down prices. Median home prices in the metro dropped 2.4% year over year.
“Austin is a very outdoor-friendly destination, and I think that’s a huge driver for recent grads,” says Brad Pauly, a local broker with Pauly Presley Realty. “All those green spaces, trails, lakes, and natural pools are very appealing.”
But what makes it a truly kick-ass place for singles? There’s “culture here as well as fantastic beer and food scenes. It’s very easy to mingle,” Pauly says.
3. Columbus, OH
Median list price: $250,000
Unemployment rate: 3.8%
5-year wage growth: 18.7%
The hottest housing market in the nation isn’t on the East or West Coast—it’s the capital of Ohio. And thanks to a surge in young professionals moving to the city in America’s heartland, the popularity of walkable neighborhoods near downtown has exploded. These include German Village, known for its brick cottages, or Grandview Heights, with charming homes built in the ’30s and ’40s.
“Microbreweries are popping up everywhere in these neighborhoods—they’ve become cool places to eat and grab a drink,” says Lee Ritchie, a real estate agent at Re/Max Metro Plus.
Columbus sees a lot of grads from Ohio State University who decide to stick around. But it also attracts professionals who work at Fortune 500 companies such as Nationwide Mutual Insurance, and L Brands (Victoria’s Secret and Bath & Body Works).
Median list price: $219,100
Unemployment rate: 3.5%
5-year wage growth: 18.9%
It’s common for Philadelphia and Pittsburgh students to head to Pennsylvania’s state capital after graduation. Harrisburg has tons of good government, political, and lobbying jobs.
But Harrisburg’s biggest draw is affordability. With rent and home prices so low, the median $68,500 household income of millennials here can stretch a great deal. Buyers can easily find older homes in need of some work for under $150,000. Those looking for new construction can try Mayberry, a growing subdivision where new Craftsman-style homes start around $300,000.
Extracurriculars? Try joining the popular running groups that jog through the 229-acre Wildwood Park near downtown.
Median list price: $295,100
Unemployment rate: 2.9%
5-year wage growth: 21%
Grand Rapids’ rep as Beer City USA has helped it to attract millennials who might have otherwise headed to larger Midwestern cities.
“A lot of kids may think Chicago or New York are the best places for them, but when they start drilling down the numbers, they realize they won’t be able to afford much,” says Trisha Cornelius, a real estate agent with Keller Williams. “Grand Rapids is a hidden gem where they can get a good job, pay little rent, and have all those big-city amenities.”
For weekend fun, folks head to the Pyramid Scheme, a pub and music venue in the Heartside Neighborhood which hosts bands and events like Yoga Mondays. Another great place to meet people is the Watersview Rooftop Bar—offering, as the name suggests, a sweet combo of awesome views of the river and tasty cocktails.
Many younger residents rent lofts in converted warehouses or new apartment buildings near downtown which go for $800 to $1,400. When they’re ready to buy, they can get find deals such as this remodeled, four-bedroom home with a front porch for just $175,000. But they had better not wait too long: Earlier this year realtor.com named Grand Rapids the top market poised to skyrocket in 2019.
Median list price: $355,100
Unemployment rate: 2.4%
5-year wage growth: 24.2%
These days, it’s not just country music fans heading to the trendy Music City. Younger newbies are going to places like East Nashville, an up-and-coming neighborhood known for its farm-to-table restaurants, underground music shows, and vintage clothing shops. Rent for a one-bedroom in a new, swanky apartment building start above $1,500—but there are some smaller, older homes for around $1,100.
After years of huge price appreciation, Nashville home list prices are beginning to fall, dropping 1.5% year over year. That’s music to the ears of buyers. Condos with balconies can go for under $250,000. Plus, there are still a few single-family homes around $300,000 on the market.
The city also has plenty of good-paying jobs. Amazon announced in November it would bring 5,000 corporate jobs averaging $150,000 salaries to Nashville.
And folks who tie the knot here don’t have to travel far for the festivities: Nashville has become a mecca for bachelorette parties.
Median list price: $180,000
Unemployment rate: 4.3%
5-year wage growth: 15.9%
The tech companies that have moved into the old factories and warehouses lining the Allegheny River are attracting young engineers to the Steel City. Pittsburgh has offices for big companies like Uber, Facebook, and Google—as well as fast-growing start-ups like Duolingo, an online language learning service.
“We have a big influx of people from Long Island and the rest of the New York City area,” says Bobby West, a real estate agent at Coldwell Banker. “They can no longer afford to buy homes around their friends and family there.”
Young grads often get apartments in Lawrenceville, a former working-class neighborhood that’s been transformed into a hipster enclave full of new breweries and cafes. Once they get sick of shelling out around $1,500 per month on an apartment there, they might head to a community like Brighton Heights, around 15 minutes from downtown, where they can find three-bedroom, ’50s ranches for under $150,000.
“Pittsburgh is not a McMansion city. Our homes are usually [built] pre-1950s,” says West. “They are popular with first-time home buyers who want something charming.”
Median list price: $210,300
Unemployment rate: 3.8%
5-year wage growth: 17.9%
St. Louis is hard at work revitalizing its downtown, a project it’s dubbed the Downtown Next 2020 plan. It includes deep dives into the renovation of historic neighborhoods (Garment District, you’re next) and even improving landscaping across the area. And it’s already paying off as more local grads from schools like Washington University and Webster University are putting down roots.
Grads in the Gateway to the West can skip renting altogether if they so choose. This one-bedroom condo in a converted historic building in the Lafayette Square neighborhood can be had for $152,000.
Ands there’s plenty of fun things to do here. A great way to meet locals is through the communal love of the St. Louis Cardinals—expressed either in Busch Stadium or one of the many, many beer bars that’ll be showing the game. What else would you expect from the hometown of sudsy juggernaut Anheuser-Busch?
9. Denver, CO
Median list price: $475,100
Unemployment rate: 3.3%
5-year wage growth: 24.7%
Between the many hiking, kayaking, and skiing opportunities in the mountains, the legal recreational weed, and the high-flying start-up scene, the Mile High City is an aspirational landing spot for many recent grads. But its popularity has also driven up real estate prices.
“The starter home range is the minimum of $300,000 to $500,000. You can’t find anything under that right now,” Ryan Penn, associate broker at 360dwellings Real Estate in Denver, tells realtor.com.
Someone aged 25 to 34 would need to plunk down one-third of their income on a median-priced home on the market. That’s higher than the other places on the ranking and a little more than the rule of thumb advising folks not to spend more than 28% of their monthly income before taxes on housing. But it’s still lower than Seattle, San Francisco, and many other big cities in the West. And this market is still seeing some of the biggest pay increases in the nation.
10. Portland, ME
Median list price: $359,600
Unemployment rate: 2.9%
5-year wage growth: 27.7%
This town has a great food scene that punches way above its weight. Bon Appétit named Portland—the one in Maine, not Oregon—the Restaurant City of the Year. Give some of the credit to the Roman (thin crust) pizza, Jewish-style delis, seafood joints, and excellent craft breweries.
The city also has a strong job market that keeps getting stronger. In fact, incomes grew more here over the past five years than any other market on our ranking.
“There’s a lot going on in Portland, a lot of energy and a lot of buzz. We see a lot of people moving in from other cities and bringing ideas with them,” says Jeremy Lock, a broker with Portside Real Estate Group.
That cool factor makes for a good dating scene. A local favorite is Flask Lounge, a bar that has karaoke, DJs, and comedy nights.
Most new grads are renting near downtown Portland. When they start looking to buy, they’ll head 15 to 20 minutes out to small cities like Westbrook or South Portland, where four-bedroom, Cape Cod–style homes are listed for $250,000.
“They’ve grown up in Maine, moved somewhere for school, and end up coming back,” Lock says. “Recent graduates seem to want their money to last.”
* A metropolitan statistical area is a designation that includes the urban core of a city and the surrounding smaller towns and cities.
** Fixed, 30-year mortgage payment calculated on that metro’s realtor.com median list price in March, given a 20% down payment and 5% interest rate on the loan
Data sources: realtor.com, U.S. Census Bureau, U.S Bureau of Labor Statistics, Nielsen, Yelp.com, and Zumper.com
Allison Underhill contributed to this report.
The post Launching Pads: America’s 10 Best Starter Cities for New College Grads appeared first on Real Estate News & Insights | realtor.com®.