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Millennials Make the Move to Smaller Cities

Diana Downard, 26, has drinks with friends at a pub in Denver, July 6, 2016.

New York is out. (Way out.) So are Los Angeles and Chicago.

Houston, Denver, Dallas and Sea-Tac (Seattle and Tacoma) — even Columbus (Ohio) and Riverside (California) — are the new magnets for millennials.

People between the ages of 25 and 34 are eschewing larger, expensive metropolises for smaller cities that offer more affordable housing and a lower other cost of living, according to a recent Brookings Institution evaluation of the U.S. Census Bureau's American Community Survey Five-Year Estimates.

This internal migration is changing the map as the United States grows, settles and prospers, Brookings said.

"Millennials, a highly educated and diverse generation now squarely in their late 20s and 30s, are forming the backbone of various regions' emerging labor forces and consumer bases," wrote Brookings' demography expert William Frey.

Brookings measured the movements of millennials and baby boomers — Americans 55 and older — from 2004 to 2017, with special attention paid to the Great Recession in 2007-2008, when the economy sank after a national banking and credit crisis. Jobs were hard to come by, especially for millennials entering the market with little experience. Carrying a large amount of student debt and few work options strangled their ability to marry, have children and buy homes.

"Young adults are still far from reaching their earlier mobility levels, despite occasional upticks in recent years," wrote Frey. "For them, the impact of the recession in terms of delayed marriage, home buying and childbearing appears to continue — even as the economy has heated up."

Top choices

Which cities took on a new appeal for millennials?

Houston, Dallas, Seattle-Tacoma, Austin, Charlotte, Portland (Oregon), Riverside, Phoenix, Nashville, Atlanta, Columbus, Las Vegas, Minneapolis, Sacramento and Raleigh, in descending order. San Francisco came in 17th, while Sunnyvale (in California's Silicon Valley region) ranked 29th in increased millennial population.

The biggest losers were New York, Los Angeles, Chicago, San Diego, Miami, Boston, Philadelphia, New Orleans, Milwaukee, Washington (D.C.), Pittsburgh, Buffalo, Tucson, Rochester (New York), Cleveland, Hartford, Baltimore, St. Louis and Louisville.

Among states, Texas gained an average 32,318 millennials a year between 2012 and 2017. Washington state gained 18,174; Colorado, 16,156; Oregon 7,542; and Arizona, 5,742.

New York lost 37,217 young people per year during the same period, with Illinois seeing 17,884 millennials move out. New Jersey lost 7,100; Massachusetts, 6,353; Alaska, 6,038; Pennsylvania, 5,210; and Washington, 4,092. California lost 2,325 millennials.

Living expenses

The cost of rent — another measure of migration movement — increased from January 2018 to January 2019 in destination cities, and stalled in some cities that lost millennial population. Las Vegas showed the largest average rent increase of $80 per month; but, at an average rent of $1,048, Sin City remains affordable for millennials, according to RentCafe, a nationwide apartment search website.

Phoenix, another southwest growth city attracting people from more expensive West Coast states, saw a $72 per month rent increase. Again, the average rent is a manageable $1,018, RentCafe reports.

San Diego (up 6.4 percent), Nashville (up 6.2 percent), and Los Angeles (up 6 percent) were among the largest cities with the fastest increases in average rents, RentCafe reported. Nashville's average rent of $1,347, however, came in far lower than the average of $2,460 in Los Angeles and $2,184 in San Diego.

Queens, New York, was the only large city where rent fell since last January, by 0.2 percent to $2,196. Houston grew only 0.8 percent, and the East Coast cities of Boston and Baltimore both saw meager 1.1 percent increases in average rent since January 2018.

So, how much income does a millennial need to afford rent in some of these cities?

According to SmartAsset, a financial technology company, renters need about $123,000 a year to live in some of California's larger cities; $163,000 in New York City; $108,000 in Washington, $50,400 in Charlotte, and $39,300 in Columbus, Ohio.

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