Mortgage rates are near three-year lows, and in real terms housing prices have reverted to their levels of 2003 on a price-to-rent basis. Inventories remain a bit constrained, however, with new home inventories of around 5.6 months and existing homes inventories of about 4.4 months. But there are cities where buying a home is a good deal right now.
While price is a major concern, it’s not the only one. Affordability, inventory, mortgage availability, job growth and livability are all factors for first-time buyers, according to a recent survey by Realtor.com.
The survey focused on the 25-to-34 year old age group (millennials) that represent the majority of first-time home buyers. The survey measured affordability by home price to income ratio for millennials and inventory by the number of homes for sale per 1,000 households. Mortgage availability was measured by the share of home loans purchased by the 25-to-34 year olds and job growth was determined by lower than average unemployment. Livability was measured by the number of restaurants, schools, shops, health care facilities and arts and entertainment venues per 1,000 households.
Here then are the top 10 cities for first-time buyers, with average home prices and unemployment rates.
- Portland, Maine; $304,000; 3.3%
- Philadelphia, Pa.; $222,000; 4.8%
- St. Louis, Mo.; $164,000; 5.2%
- Allentown, Pa.; $188,000; 5.0%
- Albany, N.Y.; $238,000; 4.5%
- Harrisburg, Pa.; $168,000; 4.2%
- Baton Rouge, La.; $217,000; 4.8%
- Dayton, Ohio; $115,000; 5.2%
- Minneapolis, Minn.; $294,000; 3.9%
- Virginia Beach, Va.; $256,000; 5.0%
Realtor.com also named the five worst markets for first-time buyers based on rising home prices and falling inventories, neither of which is overcome by job growth or infrastructure. All are in California: Stockton, Fresno, Bakersfield, Sacramento and Riverside. Home prices range from $22,000 (Bakersfield) to $428,000 (Sacramento) and unemployment rates range from 5.4% (Sacramento) to 10.9% (Bakersfield).
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