Millennials With High Wages Are Opting To Buy, Rather Than Rent, In Midland

KUT 90.5 | By Natalie Krebs

Published May 16, 2019 at 2:20 PM CDT

A construction worker works on a home in Odessa, Texas. The Midland-Odessa area is one of the fastest- growing areas in the country in terms of population, and has attracted a number of Millennial homebuyers.

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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鈥檚 not the case in Midland.

At Meagan Magee鈥檚 house, which she recently purchased with her husband Patrick, decorations are scattered about as she gives a quick tour.

鈥淲ell, this is the living room, of course. It鈥檚 fairly small, but we got the big couch to fit, so that鈥檚 what we were worried about,鈥� Magee says.

Magee and her husband have lived in the three-bedroom, two-bath house for a month, and Magee says it鈥檚 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 鈥� 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,鈥� Magee says.

Now, that may seem crazy-fast, but real estate agent Steve Oliver says the Magee's timeline was typical for Midland鈥檚 housing market.

鈥淎 lot of times, I鈥檒l put a house on the market and it will sell within 24 to 72 hours, and we鈥檒l have multiple offers. I鈥檝e had up to 11 offers in one day on a property,鈥� Oliver says.

Oliver has been a real estate agent in the Midland-Odessa area for 35 years. In the last few years, he鈥檚 seen an uptick in calls from Millennial clients 鈥� young professionals like the Magees looking to buy their first home.

鈥淯nder 35: you know, it鈥檚 probably 40%, 50%,鈥� Oliver says.

That鈥檚 different than the typical narrative that Millennials aren't buying homes. Oliver says that's because of the oil boom in the Permian Basin.

鈥淚 think it gives the Millennial population in West Texas a leg up on their counterparts who live in economies that don鈥檛 have this boost. This will take them a lot longer to enter the market. These folks are entering the market a lot faster,鈥� Oliver says.

A 2018 report from the Texas comptroller鈥檚 office shows that Midland has the highest average annual wages in the state: nearly $70,000. That鈥檚 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.

鈥淵ou don鈥檛 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鈥檙e out there, you have more pressure to wind up buying rather than renting,鈥� he says.

The Magees say that鈥檚 exactly why they started looking to purchase a property. Earlier this year, the couple鈥檚 apartment complex announced a rent hike. The rent for their tiny one-bedroom apartment increased by $250.

鈥淕oing up $250 would have put us at about $1,850 in rent after including utilities and whatnot,鈥� 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鈥檒l be a good deal for you, as long as you can stay in the house for a minimum of four, five years,鈥� Gaines says.

Gaines says right now, economists predict the boom in the Basin will last for a while, but it鈥檚 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.

鈥淔rom 1981 to 1986, property values in Odessa dropped 50% to 60%. It devastated the community. We had literally thousands of foreclosures,鈥� Oliver says.

But Millennials like the Magees aren鈥檛 worrying about that right now. They say they're just glad to be out of an apartment.

鈥淚 don鈥檛 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鈥檚 good fortune lasts.