It’s tough being a first-time homebuyer
A new Bankrate ranking found the Austin, Texas, metro area is the best for first-time home purchasers.
Roschetzkyistockphoto | Istock | Getty Images
Prospective buyers looking to secure the purchase of their first home this spring will still face a difficult market.
Yet there are signs some areas of the country may provide more opportunity for those prospective owners shopping for their first piece of real estate. A new Bankrate ranking found the Austin, Texas, metro area is the best for first-time purchasers, while the worst is Washington, D.C.
The ranking of 50 metropolitan areas was based on affordability, which was given a 40% weight; job market, 30%; market tightness, 15%; and wellness and culture, 15%.
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Kansas City, Missouri, came in second in the ranking of best cities, followed by Raleigh, North Carolina; Minneapolis and Jacksonville, Florida.
Austin’s high ranking was “surprising,” given that affordability dragged down its score, noted Jeff Ostrowski, analyst at Bankrate.
“Affordability is a challenge in Austin, but it’s not as challenging as in a lot of the California markets or in places where wages just haven’t kept up with home prices,” Ostrowski said.
Yet Austin and certain other major cities are poised to see double-digit declines in home prices as supply outpaces demand, according to recent research from Goldman Sachs.
Home prices in Austin are set to decline by 19% from the fourth quarter of 2022 to the fourth quarter of 2024, the firm projects, while Phoenix is expected to see 16% declines. San Francisco, meanwhile, may drop by 15%, and Seattle by 12%.
Six of the 10 best metro areas in Bankrate’s rating were in Texas, Florida or Missouri.
Meanwhile, six of the 10 worst metro areas were in California.
Cities that came in last, in addition to Washington, D.C., included Boston, New York, San Diego and Riverside, California.
Affordability remains buyers’ biggest challenge
First-time homebuyers now face several challenges: high home prices, high mortgage rates and limited inventory in many locations.
“It’s tough to be a first-time buyer right now,” Ostrowski said. “The affordability equation is difficult.”
Affordability is still the No. 1 challenge for first-time homebuyers, said Zillow senior economist Orphe Divounguy. Yet home ownership is still key to building wealth in this country, he noted.
“The best advice for first-time homebuyers is to look at those markets that are relatively more affordable,” Divounguy said. “Look for markets where you’re going to have more bargaining power.”
A “For Sale” sign in front of a home in Roseville, California, on Dec. 6, 2022.
David Paul Morris | Bloomberg | Getty Images
Zillow recently put out its own list of best metro areas for first-time homebuyers in 2023.
The list includes Wichita, Kansas; Toledo, Akron and Cleveland, Ohio; Syracuse, New…
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