Millennial Dollars Go Further In Texas Than Any Other State
As Millennials come of age and the spending power of the group increases, how far their dollars will go has become an essential question to continued urban growth. And according to JLL research, Millennial dollars stretch more in Texas cities than other major metros.
Sarbjit Nahal, head of Thematic Investing at Bank of America Merrill Lynch, told CNBC that by 2025 Millennials will have over $8 trillion worth of annual net income. But the translation to consumer spending will be uneven across the country.
JLL's research team took an in-depth look at the cost of living in the country's biggest cities. It started with average incomes for working Millennials (aged 25-34 years). In San Antonio, the Millennials earns $75k versus $70k for Portland. Taking into account cost of living, Texas looks even better. Young professionals in the Lone Star State keep up to $7,300 more each year than their counterparts in other areas.
The inset boxes in the graphic above are the raw monetary differences for major metros. In Texas, the average income of a Millennial feels $1k to $7,300 higher than the US average — which gives them more potential dollars available for spending.
With spending power hitting trillions of dollars, Millennials are fast becoming a force to be reckoned with in the market. But experts are concerned about harnessing all that buying power, because Millennials don't spend the way past generations did.
That's most evidenced in housing. Fifty-two percent of Millennials chose to rent in 2005, and that number is now over 60%.
As Millennials enter peak homebuying years, their reluctance to enter the housing market could change. The cohort's sheer size could lead to a surge in home sales.
Millennials have also been reluctant to buy items such as cars, music and luxury goods. Instead of ownership, they are turning to services and access, giving rise to the sharing economy.