Best Market for First-Time Homebuyers? Texas, Florida
Mike Sorohan email@example.com
Four of the top five markets for first-time homebuyers are in Texas and Florida, with Tampa leading all markets, said Zillow Inc., Seattle.
The company's 2018 Best Markets for First-Time Buyers Analysis said most difficult markets for new homebuyers are in California, based on affordability and competition. Zillow Senior Economist Aaron Terrazas said those factors are important, as more than 40 percent of all buyers in the current market are purchasing their first home.
"The U.S. housing market is competitive for all buyers, as there are not enough homes for sale to meet today's strong buyer demand," Terrazas said. "In January, inventory of the least expensive homes was down 17.1 percent annually, compared to a 9.7 percent decrease for all homes. In 2017, nearly a quarter of home sales were above the listed price. This puts first-time buyers at a disadvantage this home shopping season because they won't have the capital from a previous home sale to help fund a down payment or keep up with bidding wars."
The analysis ranked the 35 largest U.S. housing markets based on where first-time buyers have the best chance to find an affordable home with little buyer competition and strong forecasted home value appreciation. First-time buyers make up 42 percent of all buyers, according to the 2017 Zillow Group Report on Consumer Housing Trends. Saving up for a down payment is the most commonly cited barrier to homeownership.
Zillow said new buyers will have it easiest in the Southeast, especially Texas and Florida, with four of the top five and five of the top 10 markets for first-time buyers in those two states. The report said homes in those markets require a smaller down payment and buyers are more likely to encounter price cuts. First-time buyers are likely to face the most difficulty in pricy West Coast markets, especially California metros. "Not only are homes expensive, but inventory is especially limited, and it takes longer to break even on a home purchase," the report said.
Zillow said the 10 best markets for first-time homebuyers are Tampa; Indianapolis; Houston; Orlando; San Antonio; St. Louis; Philadelphia; Atlanta; Las Vegas; and Dallas.
"More and more millennials are reaching the point in their lives where they are ready to buy a home, but they are entering a highly competitive housing market that has been plagued by low inventory, especially among entry-level homes," Terrazas said. "Southeastern markets will be easiest for new buyers, where homes are more affordable and there's less competition. People planning to buy for the first time in some of the tougher markets should be prepared to face a more competitive environment, but that doesn't mean they should count out buying entirely."