For agents who enjoy working with clients who are first-time home buyers, there are a number of cities where this can be a major portion of their business. According to a report by CNBC, for the first time since the Great Recession, new owners are outpacing new renters in the housing market.
Demographics are playing a key role in this trend. Savvy agents can position themselves to capture a bigger share of this business by tracking current trends and staying ahead of the curve.
Millennials are reaching the age of 30, creating a large demographic of new first-time home buyers. However, today’s new buyers are more cash strapped than previous generations and prices are rising fast. This can cause problems, according to Zillow Chief Economist Svenja Gudell.
“As millennials reach the typical homebuying age, they are coming into a tough housing market with low inventory and lots of competition. More challenging metros aren’t out of reach for new buyers, but they should be prepared to face a more competitive buying environment.”
Zillow has conducted a survey that focuses on five metrics to determine which local housing markets would serve first-time buyers best: Median home values, value forecasts for equity growth, inventory, the number of listings with price cuts, and the breakeven financial time horizon for buying over renting.
Seven of the Top 10 metropolitan markets cited as the best by Zillow have a median home value that is lower than the national median home value of $196,500. As a result, they require less money for an acceptable down payment.
The Top 10 markets and Zillow’s home value index for each city include Orlando, Fla., $202,900; Tampa, Fla., $183,300; Indianapolis, Ind., $137,300; Las Vegas, Nev., $219,200; San Antonio, Texas, $158,500; Pittsburgh, Pa., $135,700; Atlanta, Ga., $175,800; Detroit, Mich., 138,700; Dallas, Texas, $205,300; and Cleveland, Ohio, $132,400.
And for every action, there is an equal and opposite reaction. That means, there also are cities where first-time buyers may be left out on the cold.
In a separate report by Bankrate, California was identified as the toughest state for first-time homebuyers. Hawaii and New York came in second and third. A 5 percent down payment in the expensive San Francisco Bay Area, for example, is larger than a 20 percent down payment in most of the best markets for first-time buyers. Bankrate.com analyst Claes Bell said these issues can be an issue for first-time buyers.
“Tight market conditions and unaffordably high prices really plague what many young Americans feel are the most desirable places to put down roots.”