The top 10 markets for first-time home buyers this year include seven metropolitan areas in Sun Belt states, plus the areas around Pittsburgh and Philadelphia, according to a new report by realtor.com®.
Pittsburgh topped the study’s ranking, which examined five key factors that make particular markets ideal for first-time buyers: market popularity, prices, inventory, time on market and unemployment rates.
Florida had the most market of any state, with the metropolitan areas of Tampa-St.Petersburg-Clearwater, Orlando and Jacksonville all making the list.
“As we head into home-buying season, these markets show favorable conditions for first-time buyers, which is encouraging because these buyers are crucial to the housing market,” said Steve Berkowitz, CEO of Move Inc., operator of realtor.com.® “First-time buyers have a widespread impact on the local housing markets. In transitioning from renters to owners, new buyers pay property taxes and other fees and taxes associated with homeownership that benefit local schools and services.”
Here are the criteria realtor.com® used to rank the top 10 markets:
- Location, location, location: Market popularity is an important consideration for first-time buyers. It is common for owners to become “move up” buyers and purchase a larger home a few years after a first-home purchase. Buying a home in popular markets increases the likelihood of making money on a first home.
- Affordable list prices: One of the biggest barriers to homeownership is affordability. Homeowners not only have to be able to afford a monthly mortgage payment, but must have enough saved for a down payment.
- Ample inventory: Inventory shortages can often spark bidding wars in which investors or buyers with higher incomes can price out first-time buyers. Markets with an ample inventory of homes for sale are less likely to experience bidding wars.
- Reasonable time on market: Median age of inventory is a clear indicator of demand in a market. High demand is another factor that prompts bidding wars and makes it difficult for first-timers to get the home of their dreams. Additionally, first-time homebuyers should consider how long a home has been on the market. They may have an opportunity for a better deal if a seller is required to price a home more competitively in order to close.
- Steady employment: Unemployment rates affect all aspects of the economy, including first-time buyers. In order to pay for their mortgages, new buyers need to work and hold steady jobs in markets that support their job.
Methodology: Realtor.com® examined key housing indicators including: search rank, median list price, year-over-year change in inventory, median age of inventory and unemployment rates across 146 markets and evaluated the metrics against the needs and desires of the typical first-time homebuyer. All metrics considered were pulled directly from realtor.com®’s February 2014 data and the U.S. Bureau of Labor Statistics.
by Justin Lombard