• Cleveland's millennial population rose 6% since early 2020, the same as Tampa and Dallas.
• Affordability and good jobs are giving the Midwestern city a boost with the generation, per BofA.

Over the past three years, Cleveland has become an unlikely mecca for millennials searching for affordability.

The total number of people living in the city born between 1981 and 1996 — currently aged 27 to 42 — grew 6% in the three years through March 2023, matching the increases in Tampa, Florida, and Dallas, according to the Bank of America Institute. Austin, Texas, was the only city in the US that saw more growth over this period.

Cleveland's status may be surprising. It was startling to even some analysts hearing the data for the first time at a recent BofA housing symposium, a bank research report showed.

After all, the city was being mentioned in the same breath as Sunbelt metros that have been long celebrated as pandemic and post-pandemic boomtowns. But while Cleveland may not be a technology hub or have mild winters, it does have two very important things going for it that millennials can't get enough of: good jobs, and affordable housing.

"The cities in the Midwest are getting some traction," BofA Institute economist Anna Zhou told Insider, pointing out that Columbus, Ohio has seen growth as well. "The relative affordability does play a factor."

In order to come up with the ranking, the BofA Institute used home address data from 46 million of adults who've been customers of the bank since 2018. To be sure, it's not as comprehensive as public data, but it is fresher in some respects because it covers more recent periods.

Pay is growing faster than the cost of housing in Cleveland

Cleveland is a star when it comes to affordability.

It's one of only four cities where wage growth outpaced rents from 2009 to 2021 as population and jobs continue to grow, according to a new report from Clever Real Estate. During that period, incomes grew 3% more than the average rent there, the data show. Cleveland residents now pay just over 17% of their income on rent, while the average American pays 20%.

"The economy's fairly diverse," Zhou said. Indeed, the city of Cleveland — with a population of 361,607 — and its surrounding area have robust and growing healthcare, hospitality, manufacturing, and construction industries, according to the Bureau of Labor Statistics.

Only Providence, Rhode Island, which where income grew 18% more than rent, and Buffalo, New York, where income grew 7% more than rent, were better off than Cleveland when it comes to improvements in their income-to-rent ratios, according to Clever. Pittsburgh income growth exceeded rents by 1%. The end result is that residents have more pocket cash, which supports the local economy.

"We are also seeing in terms of the current spending in that region, they're also doing pretty well," Zhou said.

Renters now will become homebuyers later

The influx of millennials to the area doesn't seem to have had a material impact on the homebuying market, though.

The median price of homes in Cleveland was actually down 9% May, year-over-year, according to Redfin. Homes are also lingering on the market for 7% longer and nearly 12% less homes were sold during this period.

Indeed, the BofA Institute found that millennials are by-and-large staying out of the housing market this cycle, but still are window shopping for the future.

"In the longer term, it is likely that cities with a large inflow of millennial residents will see a meaningful boost to the local housing market," the BofA economists said in the report.

Are you a millennial who has recently moved to Cleveland? Do you want to share why you did so? Reach out to the reporter of this story at kneubauer@insider.com.