Graduating Into the Housing Market

A new analysis by Zillow has found that Phoenix is the best market for this year’s college grads, featuring a combination of rental affordability and concessions, job prospects, and neighbors in their 20s for the class of 2024 to start life’s next chapter on a high note.

With Phoenix taking the top spot, Albuquerque, New Mexico; Colorado Springs, Colorado; San Antonio, Texas; and Portland, Oregon, round out Zillow’s top five markets for new college grads.

“The first move after college is an exciting milestone. Zillow’s best markets for new grads are great places to kickstart a career and take the first steps of adulthood,” said Anushna Prakash, Economic Research Data Scientist at Zillow. “Rents won’t take up too much of a new grad’s paycheck, leaving money to explore a new city or start saving up for a down payment. For renters who don’t mind a housemate or two, renting a room can help save some extra cash and might even introduce lifelong friends.”

To determine rent affordability estimates, Zillow used each metro area’s typical rent according to the Zillow Observed Rent Index and an estimate of recent college graduate wages using the Bureau of Labor Statistics’ Occupational Employment and Wage Statistics dataset. Zillow analyzed jobs that require a bachelor’s degree but no prior experience and took the 25th percentile of wages weighted by the employment of those jobs in the geographic area.

Top metros

Zillow’s best markets for new college grads offer promising career opportunities, as well as relatively affordable rentals. The analysis looks at rent affordability, the share of rental listings on Zillow offering a concession, job growth, and the share of the population ages 21-29.

With an average rent of $1,887, and the average recent college grad earning $65,608 annually, Phoenix claimed the top spot primarily due to its booming job market, ranking as the second-strongest among the markets analyzed by Zillow. A new grad can anticipate spending about 34.5% of their starting salary on a typical rental, which ranks outside of the top 60. Phoenix also ranked in the top 10 for the share of rental listings on Zillow that offer concessions, such as a free month of rent or free parking (50.5%). Those factors helped Phoenix overcome only middling affordability. A new grad can anticipate spending about 34.5% of their starting salary on a typical rental, which ranks outside of the top 60.

Ranking second on the list was Albuquerque, New Mexico, where the current average rent price comes in at $1,583, and recent college graduates are earning $65,727 annually. The share of entry-level income spent on rent was an average of 28.9% each year. Located approximately 400 miles east of Phoenix, estimated entry-level income in Albuquerque closely mirrors that of Phoenix, but typical rent are lower by more than $300, helping ease the rent burden for new grads. Although the twenty-something population is not as large as other markets on this list, the area’s strong job market pushes Albuquerque near the top of the list.

Colorado Springs, Colorado landed in the third spot on the list, with an average typical monthly rent of $1,858, a typical graduate salary of $68,000, and a share of the estimated entry-level income spent on rent at 32.9%. Although rent costs consume more than one-third of the annual income, Colorado Springs ranked in the top 10 for the share of individuals in their 20s, offering an ideal backdrop for forging connections and finding roommates to share housing costs with.

San Antonio, Texas claimed the fourth spot on the list with the typical rent averaging $1,477, and the average recent college graduate income at $61,643. San Antonio boasts the most affordable rent among the top five markets, allowing graduates to dedicate only 28.8% of their income to housing expenses. In addition to its affordability, 48% of rental listings on Zillow in San Antonio offer concessions.

Rounding out the top five best spots for college grads, Portland, Oregon has a typical monthly rent price of $1,830, and those who secure a job can expect an annual average income of nearly $76,000, the highest estimated starting salary among the top five. The share of the estimated entry-level income spent on rent averages 29% in the most populous city in Oregon, is ranked as the fifth-best market for recent college graduates.

Targeting the rental market

For grads who consider an affordable rent as their top priority, Des Moines, Iowa, while placing 11th overall in Zillow’s ranking, took the top spot for rent affordability. A typical college grad can expect to spend less than 25% of their annual income on the typical rental there.

And new grads looking to score a deal on a rental can focus their search on Charlotte, North Carolina, which came in at 14th overall on the list. Fifty-seven percent of Charlotte rental listings on Zillow are offering a concession, more than any other market Zillow analyzed.

The state of the nation in rentals

Realtor.com reports that April 2024 marked the ninth year-over-year rent decline for apartments observed since the metric began being tracked in 2020. The report found asking rents dropping by 0.7% or $12. The median asking rent in the 50 largest metros registered at $1,723, up by $16 from last month, but still down $33 from its August 2022 peak. Studio apartments are going at a rate of $1,443, down $25 or 1,7%; one-bedroom apartments are going for $1,601, down $22 or 1.4%; and two-bedroom apartments are going for $1,915, down $13 or 0.7%.

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Picture of Eric C. Peck

Eric C. Peck

Eric C. Peck has 25-plus years’ experience covering the mortgage industry, most recently serving as Editor-in-Chief for National Mortgage Professional Magazine. He graduated from the New York Institute of Technology, where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books, and has served as Copy Editor for Entrepreneur.com.
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