Where first-time homebuyers should flock
May 23, 2014
The home insurance sector would likely see a major boost in activity if more first-time homebuyers could break into the market. But in the current economy, many buyers are struggling to find affordable homes as inventory is especially tight among lower-end listings.
According to Stan Humphries, chief economist at Zillow, the spring buying season usually provides a major boost, but that hasn't been the case in 2014?
“First-time home buyers are ready to buy, but unfortunately, aren't able to take advantage of the spring shopping season and low mortgage rates because of the lack of homes for-sale in their price range,” he said. “This shortage of inventory is driven by a couple factors, most notably by stubbornly high negative equity, particularly at the lower end of the market, which is preventing many sellers from listing their homes.”
Many homes are too expensive for first-time buyers, making it difficult to get into the market.
Home sales in April were down 4.2 percent from the same month a year prior, according to the U.S. Census Bureau and the Department of Housing and Urban Development. Inventory has fallen for four straight months since the start of 2014 and is down in 21 of the nation's 35 largest metro areas. The most significant drops in inventory were seen in Houston (26.6 percent), San Antonio (23.7 percent) and Boston (23.4 percent).
The best markets for first-timers
But not every market is terrible for first-time homebuyers. Realtor.com
made a list of some of the best markets for first-time buyers. Factors for the formula included market popularity, prices, inventory, time spent on the market and employment rates.
“First-time buyers have a widespread impact on the local housing markets,” said Steve Berkowitz, CEO of Move, Inc., operator of Realtor.com. “In transitioning from renters to owners, new buyers pay property taxes and other fees and taxes associated with homeownership that benefits local schools and services.”
The top market for new buyers was Pittsburgh, which had a median listing price of $135,000. Tampa, Florida; Philadelphia; Fort Worth-Arlington, Texas; and Orlando, Florida, rounded out the top five.
Jacksonville, Florida; Dallas; Phoenix and Durham, North Carolina were also among the notables.
“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,” Berkowitz said.