When Greg Laffey moved to New York City in 2005 he thought he would never return to his childhood home in the quiet suburbs of Pittsburgh. Then he turned 30 and saw that the opportunities for buying a home did not exist for him in New York, but they did in Pittsburgh. Laffey needed to move where he could build a sustainable future.

He is not alone.

Timing has worked against millennials. They came of age during a recession and entered the workforce in the rebuild that followed. This left many wary of the economy’s fluctuations, specifically, the difficulties of the housing market.

Buying in the six major housing markets – New York City, Washington D.C., Chicago, Boston, San Francisco, and Los Angeles –  where many live has become unreasonable for a lot of potential buyers primarily due to the price. Incomes for many millennials have not afforded them the opportunity to buy in these larger cities.

Millennials are buying homes in greater numbers every year. According to a survey by Trulia, nine in ten millennials want to buy a home eventually and 57% of those want to do it in the next two years. Many are looking at mid-sized cities – like Pittsburgh – because they are encouraging growth and opportunity by courting tech businesses to open offices and redevelopment plans to rebuild housing.

According to the Case Shiller Housing Price Index, in the beginning of 2012 prices nationwide bottomed out at the average of about $136,500. Employment has followed suit but many millennials still find themselves priced out of buying in large cities.

Affordability in major cities is not a new problem, but it has come to define the struggle for millennials to buy in comparable numbers to earlier generations. Second-tier cities are redefining themselves to capitalizing on this inequality and draw in potential buyers.

For Laffey, Brooklyn was his home for ten years. He thought he would stay forever. But Pittsburgh offered something that just wasn’t feasible in New York City: He could own.

Pittsburgh allowed him not only to purchase his own home but create his own business opportunities. At NYU, he studied set design. Now, he is using those skills to renovate homes and resell them with his brother and father. In Pittsburgh, he can own his apartment – instead of sharing one with two friends as he did in Brooklyn – while still having access to the urban amenities he was accustomed to in New York.

Greg Laffey renovating a Pittsburgh home that will be resold. Photo provided by Greg Laffey.

“I still wish I could do what I’m doing in Pittsburgh, in New York,” Laffey said.“Having my own property or being able to take the risk of opening a bar is possible in Pittsburgh. I wish I could do it in New York because lifestyle-wise I still have a preference for the larger city.”

Millennials are not ditching the big cities altogether. Many of them living in large urban areas plan to stay.

Cities like San Francisco or Seattle have drastically changed in identity and price point as a result of the tech boom. The high cost to live and own in these places hasn’t dampened the demand for new home buyers, but these buyers can afford the steep prices that most people cannot.

People searching for cheaper homes are looking at places like Phoenix, Milwaukee, or Pittsburgh. After 2016, there was positive homeownership rate change in all three of the counties of these cities; after consistent negative rate change since 2010. Homeownership rate is a measure of the number of owned households divided by the total number of occupied houses.

Bear in mind, this is not a new phenomenon. For generations, people in their 20’s have been flocking to cities and then moving to more affordable places once in their 30’s. Recntly, the affordability gap between locations seems insurmountable.

The tech industry in San Francisco has increased the typical sale price for a home to nearly 9 times more than the median household income. This is measured as the price-to-income ratio.

In 1988, three-quarters of metro areas had price-to-income ratios below 3.0. Presently, the average ratio in urban areas is closer to 4.0 and gets a lot larger in the more competitive markets.

A 2018 study at the Joint Center for Housing Studies at Harvard University, tabulated all the price-to-income ratios nationwide from 1980 to 2017. Alexander Hermann, the main researcher of the study, compared the average home price in relation to the average household income and attributed the widening ratio to student loan payments.

“If you look at all the census data, young adults want to own homes. They aspire to own despite the barriers that prevent them,” Hermann said. “Young adults are carrying higher levels of debt than previous generations. They stay in school for longer and defer real incomes until later on in life.”

Wage growth just hasn’t been able to keep up with housing prices across the board, said Javier Vivas, a data researcher for Realtor.com. “Home prices have grown three to four times faster than incomes, putting a dent into buyers’ purchase power, particularly in the coastal and high priced areas.”

Mid-sized cities can offer an inventory of affordable, starter homes to millennials looking to settle into areas that can fit their budgets.

These cities are using their existing housing stock to their advantage to not just draw in new residents, but to entice new businesses who can offer stable jobs.

Cities once defined by manufacturing, like Pittsburgh, are starting to draw interest from the stable middle-class jobs of millennials, like the tech industry. These huge corporations are building secondary hubs in cheaper markets.

In 2015, Uber opened the Advanced Technologies Group Center in Pittsburgh where driverless cars are being tested.

George Hackett, President of Coldwell Banker Real Estate Services in Pittsburgh, said he sees cars all over the city being tested with driverless technology.

“In Pittsburgh, you have tens of thousands of homes that you can buy here for under $200,000. Also, the cost of living is less,” said Hackett. “Its attracted a lot of high tech companies, like Apple or Uber, that are attracting young people here.”

Like any other generation, millennials are following the jobs, said Vivas.

The difference is that millennials are essentially filling in mid-sized cities more than other generations.

Hyojung Lee at the Joint Center for Housing Studies at Harvard, studied population growth in one-mile concentric rings starting from the central business district of cities. His research showed millennial population growth was above average in the 0-15 mile range between the city center into the suburban areas.

“What millennials prefer or where they want to live is basically a chicken or the egg question,” said Alexandra Lee, data researcher at Trulia. “The flip side is where can they live. Where the inventory is actually becoming available is where they are gonna go.”

In a lot of cases, cities such as Pittsburgh are embracing this rebirth by using under-utilized land and vacant housing. Parts of the city that were once industrial or less developed are being rezoned for new condominiums and housing developments.

New commercial property, residential units and public space are expected around the three rivers in central Pittsburgh. It hopes to attract new residents and more business to the area.

Laffey is satisfied with his decision to move back to the place where he grew up. He has made a career out of making things with his hands. Why shouldn’t he make a career out of rebuilding the Steel City.