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WSJ Your Money Briefing
Tracking Where Millennials Settle
00:07:08
Tracking where millennials move to around the country could mean a lucrative investing opportunity. J.R. Whalen discusses this with Melissa Reagen of Nuveen Investments' TH Real Estate.
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Small Business Owner
Access to affordable credit helps me pay my employees, but I don't really need it.
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Advocate for Durbin Marshall Credit Card Bill
Inflation is killing me, but who cares? Big retailers are making record profits. That's why we support the Durbin Marshall credit card bill.
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Small Business Owner
See banks and credit unions help small businesses make payroll. This bill would cut the vital resources
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Advocate for Durbin Marshall Credit Card Bill
they need while increasing megastore profits. They deserve it, don't they?
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Small Business Owner
Tell Congress.
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Melissa Reagan
Stop the Durbin Marshall money grab for corporate megastores paid for by the Electronic Payments Coalition your Money Briefing Money and market stories from the Wall Street Journal.
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Charlie Turner
I'm Charlie Turner in New York. The ability to gauge where sectors of the population move and settle down, potentially driving up home values, could be a valuable piece of information to investors and the real estate industry. This is especially true with millennials. More on this in a moment. First, here are some money stories. Energy Stocks are Getting Pricey again The Wall Street Journal's MoneyBeat team says that oil and gas companies, bolstered by a surge in global crude prices, have taken over as the US Stock market's priciest segment. The energy sector is trading at a ratio of 19.7 times expected earnings over the next year, according to a report from Credit Suisse. That's above the tech sector's rate of 17.9 times earnings and the S&P 500's rate of 16.3 times earnings. Energy stocks have surged lately alongside rising crude prices. The price of crude is now approaching $70, a bar a level not seen since 2014 as major oil exporters hold back production and geopolitical tensions have threatened supply. From the Wall Street Journal's Economy team, US Tariffs on steel imports are likely to cost the American economy jobs, according to new research from economists at the Federal Reserve bank of New York. A recent posting from the New York Fed's Liberty Street Economics blog said, although it is difficult to say exactly how many jobs will be affected, given the history of protecting industries with import tariffs, we conclude that the 25% steel tariff is likely to cost more jobs than it saves, the blog goes on. The new tariffs are likely to lead to a net loss in US Employment, at least in the short to medium run. The New York Fed research came after the Federal Reserve said US Businesses reported rising steel prices due to the new tariffs. Coming up, J.R. whalen with an interview on how tracking where Millennials move can be a goldmine of information. This is your Money briefing from the Wall Street Journal.
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J.R. Whalen
Welcome back, everybody. Rising home prices throughout the US no doubt provide an investment opportunity, but being able to gauge where sectors of the population are moving that would potentially drive up home values can be a valuable piece of knowledge. What if you could track where the largest generation on record is moving to, setting up roots? That generation is millennials, and they're poised to reshape real estate markets throughout the U.S. melissa Reagan is head of research for the Americas division of Nuveen's th Real Estate division, and she joins us to discuss. So, Melissa, this is enormous block of the population, correct?
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Melissa Reagan
Yes, it's about 80 million people. And the millennials, as we categorize them, were born between 1981 and 1998. And we group them into what we call the older millennials and the younger millennials. And the older millennials are ages 30 to 36 today. And the younger millennials are ages 19 to 29 today.
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J.R. Whalen
So let's start with the investment opportunity of following the older millennials. Is the potential impact on the real estate market that pronounced.
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Melissa Reagan
Yeah, we think so. So the older millennials, millen people of that older millennials are about 30 million. And so what we think is going to happen is that we've tracked where are millennials living right now, where are they concentrated? And you'll see it a lot in the coast, so very expensive places. New York, Louisiana, San Francisco, Seattle, Boston. And they're living in urban areas right now. But if you think about that, they're likely to move to the suburban areas of these regions. And we say that because we think they'll actually stay in these metros because they actually have pretty good paying jobs, high paying jobs. But l urban area, once you start to get married and have children, becomes just a little bit expensive. And so we think they'll move out to the suburbs, and then that is where that will create a lot of investment opportunities.
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J.R. Whalen
And in the report, you talk about how investors should pay attention to millennial magnets. Those are the various fields and vocations that are attracting millennials to move from where they are to various points around the country.
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Melissa Reagan
Yes, that's correct. So some millennial magnet cities that we've discovered include places like Charleston, Raleigh, Pittsburgh, Orlando, Tampa, Salt Lake City. These are places, and we've identified these. Why? Because they have a job depth, so lots of jobs. They have tech jobs, they have government jobs. And so Malaya won't move there unless there's a job. But they're also affordable in terms of, if you think about it, just from a cost of living, you know, what it costs to live in these cities is actually very affordable. So that's why we believe these are cities that are going to greatly benefit from millennials.
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J.R. Whalen
And the older millennials currently living, you said along the co. Along the east and west coast. Where are they most concentrated by city?
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Melissa Reagan
It's really say Boston, New York, Seattle, San Francisco, Louisiana. San Diego, Denver, not coastal, but it's inland. And right now what we discovered is that they are in the urban areas. They're concentrating the urban areas, but like I said, we think that's going to be a shift and they'll move out to the suburban areas of those cities.
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J.R. Whalen
Now, let's not forget about the youngest set of millennials that you alluded to earlier. They may be young, but. But your report indicates they're poised to have a significant impact on the market as well, correct?
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Melissa Reagan
Yeah. And so those are those millennial magnets that we just talked about, those places that are just a little bit more affordable. Now, to be fair, you will get some older millennials that will move to. Right. So I just named them Charlotte, Raleigh, Orlando, Tampa, Pittsburgh, Salt Lake City. You'll get some older millennials that will move there just for, you know, it's just cheaper. And then you'll have the younger millennials that we think will be there as well, again, because there's a big, strong job based tech government, and we think it makes it very attractive.
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J.R. Whalen
And Melissa, that we can frame this for listeners, that this is an enormous piece of the population. And you mentioned we're talking 80 million people, and that's larger than other very influential groups that impacted the economy in past decades.
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Melissa Reagan
Yeah, that's absolutely right. And so if you think about it, the baby boomers are about 75 million. So again, millennials, 80 million, you know, an even bigger part of the population.
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J.R. Whalen
And Melissa, in the report, it shows that as the older millennials and the younger millennials that follow them into these cities, the report takes a very interesting perspective from the commercial real estate standpoint.
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Melissa Reagan
Yeah, that's correct. And so what we're saying here is that a lot of those cities I just mentioned are going to really benefit retail. I think retail will be totally reshaped in a lot of these cities because millennials want something a little bit different than Gen X or the baby boomers. Suburban office could be another, especially in the large coastal metro areas where they move out to the suburbs. Office, suburban office has really been kind of a, kind of a dead sector, if you want to call it for a long time. I think that could get reshaped. And then if you think about it from a multifamily or an apartment standpoint, as you have the younger millennials moving into places like a Salt Lake, Tampa and Orlando, we think there'll be really some strong demand for apartments in those metros as well.
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J.R. Whalen
All right. That is Melissa Reagan. She's head of research for the Americas division at Nuveen's th Real Estate division. Melissa, thanks for being with us.
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Melissa Reagan
Thank you very much.
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J.R. Whalen
And that's your money briefing. I'm JR Whalen in New York for the Wall Street Journal.
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Charles Schwab Narrator
This episode is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. But what policy changes should investors be watching? Washington Wise is an original podcast from Charles Schwab that unpacks the stories making news in Washington right now and how they may affect your finances and portfolio. Listen@schwab.com WashingtonWise.