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Many first-time buyers cite financial burdens as a cause for delay in entering the market, but a new report by personal finance site SmartAsset suggests there are actually some bright spots in markets across the US for first-timers.
The typical first-time American homebuyer tends to be in their early 30s, or a “Millennial.” A recent survey conducted by the National Association of Realtors revealed that financial burdens like student loan debt have kept Millennials out of the housing market. In fact, last year the percentage of first-time buyers fell to 32 percent of all US homebuyers — 8 percentage points lower than the historical average.
Despite financial struggles, there are still some cities that offer affordable housing and easier access to mortgages for first-time homebuyers says SmartAsset.
To determine the top cities for first-time home buyers, SmartAsset examined every US city with a population of 300,000 and up and ranked the top 25 according to six criteria, including the number of Housing and Urban Development (HUD) approved mortgage lenders in each city, mortgage acceptance rate and the value per square foot using data from the listing site Zillow.
Once each of the 64 total cities were ranked across these metrics, the rankings were averaged with full weight given to each factor. SmartAsset then created an index, where the top-ranking city scored 100, and lowest scored a 0.
When all the data was crunched, Pittsburgh, PA was named the top city for first-time home buyers by SmartAsset with an index score of 100. The Steel City’s loan funding rate has increased in the last year from 36 percent to 79 percent. And, according to SmartAsset, this equates to easier access to conventional loans. Pittsburgh’s value per square foot was $82.08, the ninth lowest in the study. There have been no year-over-year declines in the home price index in Pittsburgh since the first quarter of 2011, says SmartAsset data.
Oklahoma City, OK ranked number two with an index score of 91.34. The city has a loan funding rate of 79 percent and an average value per square foot of $77.67. The market was one of the least “volatile” in the study, as it had recorded year-over-year price declines in only four quarters. It is also fairly affordable, with a favorable income to housing cost ratio, according to SmartAsset.
Omaha, NE rounded out the top three, with an index of 87.01. Eighty-four percent of loans are processed in Omaha — one of highest percentages in the study. SmartAsset suggests this is a good indicator that many first-time home buyers could get a mortgage loan approved. And although its value per square foot is $107.08, somewhat in the middle of the study, Omaha offers assistance programs and grants making it easier for first-time buyers to enter the market.
The top state for first-time home buyers was Texas, with seven cities ranking in the top 25 — three of which landed in the top 10 (Houston, San Antonio, and Fort Worth). And, according to SmartAsset, many of these cities rank high on availability of mortgage lenders.
Noticeably absent from the list were notoriously expensive and top draw cities like San Francisco, CA, Boston, MA, and New York City, NY. In fact, not a single California city made the top 25.
Click here to read the entire report.