Millennials With High Wages Are Opting To Buy, Rather Than Rent, In Midland
From Texas Standard:
Many Millennials, who are often saddled with student debt and face a sometimes shaky job market, have put off large purchases like homes. But that’s not the case in Midland.
At Meagan Magee’s house, which she recently purchased with her husband Patrick, decorations are scattered about as she gives a quick tour.
“Well, this is the living room, of course. It’s fairly small, but we got the big couch to fit, so that’s what we were worried about,” Magee says.
Magee and her husband have lived in the three-bedroom, two-bath house for a month, and Magee says it’s been a whirlwind. Just two months ago, they met with a real estate agent to browse some options. But then things moved quickly.
"That Monday, we set up appointments to look at – I think we saw three houses; this was one of them," Magee says.
Patrick says the house they eventually bought wasn't even on the market at the time.
"We put the offer in on Tuesday, and the offer got accepted on Wednesday. So, less than a week,” Magee says.
Now, that may seem crazy-fast, but real estate agent Steve Oliver says the Magee's timeline was typical for Midland’s housing market.
“A lot of times, I’ll put a house on the market and it will sell within 24 to 72 hours, and we’ll have multiple offers. I’ve had up to 11 offers in one day on a property,” Oliver says.
Oliver has been a real estate agent in the Midland-Odessa area for 35 years. In the last few years, he’s seen an uptick in calls from Millennial clients – young professionals like the Magees looking to buy their first home.
“Under 35: you know, it’s probably 40%, 50%,” Oliver says.
That’s different than the typical narrative that Millennials aren't buying homes. Oliver says that's because of the oil boom in the Permian Basin.
“I think it gives the Millennial population in West Texas a leg up on their counterparts who live in economies that don’t have this boost. This will take them a lot longer to enter the market. These folks are entering the market a lot faster,” Oliver says.
A 2018 report from the Texas comptroller’s office shows that Midland has the highest average annual wages in the state: nearly $70,000. That’s almost $15,000 above the state and national averages.
So, Midland Millennials have money. But they also have competition for rental property. That's because employment in Midland grew by more than 37% between 2007 to 2017.
“You don’t have as many apartments and rentals," says Texas A&M University economist James Gaines.
He says the demand for rental housing is driving up rents.
"So, if you’re out there, you have more pressure to wind up buying rather than renting,” he says.
The Magees say that’s exactly why they started looking to purchase a property. Earlier this year, the couple’s apartment complex announced a rent hike. The rent for their tiny one-bedroom apartment increased by $250.
“Going up $250 would have put us at about $1,850 in rent after including utilities and whatnot,” Patrick Magee says.
Today, he says they pay less than that per month for their 15-year mortgage. That price includes a house with two more bedrooms than what was in their apartment, plus a yard.
This may seem ideal for the Magees, but there are risks to buying a home during an economic boom. Gaines, the economist, says such a large financial commitment can be hard for Millennials to keep paying for in a volatile market.
"As long as Midland is doing well, as long as the economy holds up, as long as the oil and gas industry holds up, it’ll be a good deal for you, as long as you can stay in the house for a minimum of four, five years,” Gaines says.
Gaines says right now, economists predict the boom in the Basin will last for a while, but it’s impossible to know for sure.
Oliver, the real estate agent, says he remembers the last big energy boom here in 1981. His boss at the time told him to expect it to last another decade, but just weeks later, things went bust.
“From 1981 to 1986, property values in Odessa dropped 50% to 60%. It devastated the community. We had literally thousands of foreclosures,” Oliver says.
But Millennials like the Magees aren’t worrying about that right now. They say they're just glad to be out of an apartment.
“I don’t have to worry about my next-door neighbor making noises, worrying about finding a parking spot or worrying about stuff like that," Patrick Magee says.
And like many Millennials, and Midlanders, they hope the Permian Basin’s good fortune lasts.