The ‘Best’ and ‘Worst’ Places in America for First-Time Home Buyers

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Angelenos, congratulations — you officially live in one of the worst metro areas for first-time home buyers, according to new research from Bankrate.com.

Of the 50 largest metropolitan areas surveyed, Los Angeles ranked 49th for affordability, 48th for employment factors, 30th for safety and 39th for housing market tightness, as the supply of homes for sale nationwide fell to historic lows during the COVID -19 pandemic. But on the other hand, LA ranked third for wellness and culture.

Los Angeles was ranked “the worst metropolis for first-time buyers”, followed by Las Vegas, Seattle, Riverside and San Jose.

The typical seasonally adjusted home value in the United States hovered at $349,816 in May 2022, which includes the average home price level, according to Zillow. Home values ​​rose 20.7% nationally over the past year, he added.

To put that into context: The typical home value in Los Angeles is $1,007,124, Zillow added, with home values ​​up 17.1% over the past 12 months.

A growing housing affordability gap

But Los Angeles, Riverside and San Jose aren’t the only cities in California that are proving out of reach, especially for first-time buyers. According to personal finance site Bankrate, 10 of the worst metropolitan areas for first-time home buyers are located in California, including San Francisco, San Diego and Sacramento.

“The housing boom of the past two years has widened the affordability gap between low-cost and high-cost metro areas,” Jeff Ostrowski, Bankrate’s senior mortgage reporter, said in a statement.

“But with remote work becoming the norm for white collar workers, it’s possible to keep the top salary while living in a cheaper area,” he added. “For this study, we looked not only at housing affordability, but also at various other factors, including local unemployment rates, commuting times, crime rates and public health.”

The best places to buy a house

But there are positives, if buyers are open to relocation, according to the survey.

Pittsburgh, for example, was the “best” metro for first-time home buyers, scoring points for affordability, lack of tightness, and safety. (Philadelphia home prices are up 6.5% over the past 12 months to $233,563 in May 2022, Zillow Z,
-8.97%
said.)

To gauge the tightness of the housing market, Bankrate looked at the average days on market for homes for sale for March 2022, as provided by Realtor.com, and the year-over-year change in housing inventory through March. 2022. (Realtor.com is owned by the same parent company as MarketWatch.)

Pittsburgh was followed by Minneapolis, Cincinnati, Kansas City and Buffalo as the top metropolitan areas for first-time buyers. Bankrate also highlighted Philadelphia as a housing market not only more affordable than many western cities, but also ranked highly for its relative safety.

The rankings were roughly the same in a separate study by personal finance website NerdWallet. With cities like Pittsburg, Cleveland, and Buffalo taking the top spots as having the most “affordable” homes for first-time buyers, LA, San Diego, and San Jose, Calif., top the list of most inaccessible areas. . NerdWallet also included Miami on its list of least affordable places.

A myriad of sources

The Bankrate survey used a variety of sources, including the US Census Bureau, the US Labor Department, and violent crime and property crime data released by the Federal Bureau of Investigation.

To calculate affordability, the researchers looked at the typical income needed to qualify for a mortgage in each metropolitan area, based on the median home price in the first quarter of 2022, as reported by Attom Data Solutions; a 10% deposit; a 5% mortgage rate on a 30-year loan; plus a debt-to-mortgage income ratio of 25%.

It also cross-checked those numbers with the U.S. Census Bureau’s most recent estimates of the median income of households headed by people aged 25 to 44 in each metro area, and calculated the homeownership rate for seniors. from 25 to 44 years old in each metropolitan area.

For the wellness rankings, Bankrate used the 2020 Community Wellness Index published by digital healthcare company Sharecare SHCR,
-13.33%,
which examines access to healthcare, food and community services, including libraries and churches.

The culture ranking examines the number of arts and entertainment outlets and cultural institutions per capita, based on Bankrate’s analysis of US Census Bureau data.

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