Armed with a stellar FICO score, low debt-to-income ratio, and some cash for a downpayment and closing costs, you’re finally ready to stop paying your landlord and buy your first home. But where to buy? Most of today's real estate news focuses on rising home values/home prices. It also focuses on questions about inventory, which means the number of homes currently on the market in a given location, and affordability, which means the percentage of homes in a given location affordable for the average-income homebuyer. While many housing markets (increasingly the coastal states) are tough) to break into for the average first-time buyer, researchers at Zillow have crunched the numbers – looking at home values, income percentage devoted to housing costs, available inventory, and even the level of competition from all-cash buyers/investors – and have a list of the metro areas most accessible to these new buyers:
Indianapolis, IN Pittsburgh, PA Memphis, TN Cleveland, OH Chicago, IL Oklahoma City, OK St. Louis, MO Houston, TX Tampa, FL Birmingham, AL
With high inventory, little to no competition from cash-flush buyers, Indianapolis is the best place to be for a first-time house hunter. While renters in the city send over 26% of their monthly income to their landlord, homeowners pay just 11% toward their mortgage. On the other hand, Zillow points out a few places where first-time buyers could find a much more difficult home. That includes marquee names like New York, Los Angeles, Washington, D.C., and Seattle; it also includes locations with lower average home values, like Salt Lake City, and those (like San Jose, CA) with values so high that (along with low inventory) it may actually be slightly cheaper to rent than own. Cities like this can present a bit of a conundrum: a healthy job market with high wages, but low inventories and high prices, it can be tough for young buyers to find an available starter home.
Are you ready to buy your first home? Check out this handy list of tips for home buyers from Bankrate.com and make sure you’ve done your homework and are ready to go house hunting!