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IRVINE, CA—Renting a home is less affordable than buying in most US markets, but not where Millennials are moving the most, according to a report from RealtyTrac. In markets with the biggest increase in the Millennial share of the population over the last six years, renting is the more-affordable option.

The firm analyzed 2015 fair-market rental data recently released by the US Department for Housing and Urban Development for three-bedroom properties in 543 counties nationwide with a population of at least 100,000. In the 473 counties with sufficient rental and home-price data, the fair-market rent for a three-bedroom property next year will require an average of 27% of median household income, while buying a median-priced home requires an average of 25% of median household income based on the median sales prices in November. Buying a median-priced home was more affordable than renting a three-bedroom property in 68% of the counties analyzed, representing 57% of the total population in those counties.

However, in the 25 counties with the biggest increase in Millennials—defined as anyone born between 1977 and 1992—between 2007 and 2013, fair-market rents for a three-bedroom property in 2015 will require 30% of the median household income on average while buying a median-priced home requires 36% of median household income on average, RealtyTrac reports.

According to Daren Blomquist, VP of RealtyTrac, “First-time buyers and potential boomerang home-buyers are stuck between a rock and a hard place in today's housing market. Many of the markets with the jobs and amenities they want have hard-to-afford rents and even harder-to-afford home prices, while the more-affordable markets have fewer well-paying jobs and tend to be off the beaten path. Those emerging markets with the combination of good jobs, good affordability and a growing population of new renters and potential first-time homebuyers represent the best opportunities for buy-and-hold real estate investors to buy low and benefit from rising rents in the years to come.”

Regarding Millennials' current home-buying quandary, Blomquist tells GlobeSt.com, “I think it will reverse itself to a certain extent, and there is evidence of that beginning to happen even in the data in this report. The least-affordable rental markets, which include traditional Millennial bastions such as New York, San Francisco, Los Angeles and Miami, actually have a higher unemployment rate (6.5%) than the average of all counties (5.5%). Meanwhile, the most affordable markets have an average unemployment rate of 4.3%. And some—although certainly not all—of the top markets where Millennials are moving are actually quite affordable. Those include counties Clarksville, TN (25% of median income to pay fair market rent); Charlotte, NC (24%); Minneapolis (25%); Durham, NC (25%); Atlanta (25%); Des Moines (22%); and Midland, TX (22%). I think this demonstrates that more Millennials are willing to go places other than the usual hot spots to find both good employment and affordable housing.”

RealtyTrac also found that the top markets with the biggest increase in the percentage of Millennials over the past seven years were counties in Washington, DC; San Francisco; and Denver, all of which saw an increase of more than 50% in the share of the population that is Millennials. Other markets in the top 25 for biggest increase in Millennials included counties in New York; Nashville; Portland, OR; St. Louis; Seattle; Charlotte, NC; Minneapolis; Indianapolis; Atlanta; Orlando; Austin; Des Moines; and Midland, TX.

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