Tampa in Florida is the best place in the United States for first time buyers with more affordable homes and a less competitive housing market, according to new research.
Tampa also has a strong price growth forecast, says the latest research report from real estate firm Zillow, while the most difficult markets for those buying their first home are all in California.
Zillow ranked the 35 largest housing markets based on where first time buyers have the best chance to find an affordable home with little buyer competition and strong forecasted home value appreciation.
The report points out that currently the housing market is competitive for all buyers, as there are not enough homes for sale to meet strong buyer demand. This is at a time where first time buyers make up 40% of all home seekers.
It also points out that in 2017, nearly a quarter of home sales were above the listed price and this puts first time buyers at a disadvantage as they won’t have the capital from a previous home sale to help fund a down payment or keep up with bidding wars. Saving up for a down payment is the most commonly cited barrier to home ownership.
Overall new buyers will have it easiest in the Southeast, especially Texas and Florida. Five of the top 10 markets for first time buyers are in those two states. Homes in those markets require a smaller down payment, and buyers are more likely to encounter price cuts.
First-time buyers are likely to face the most difficulty in pricy West Coast markets, especially California metros. Not only are homes expensive, but inventory is especially limited, and it takes longer to break even on a home purchase.
After Tampa the next best market for first time buyers is Indianapolis, followed by Houston in Texas, Orlando in Florida, San Antonio in Texas, Saint Louis in Missouri. Philadelphia, Atlanta, Las Vegas and Dallas.
‘More and more millennials are reaching the point in their lives where they are ready to buy a home, but they are entering a highly competitive housing market that has been plagued by low inventory, especially among entry level homes,’ said Zillow senior economist Aaron Terrazas.
‘Southeastern markets will be easiest for new buyers, where homes are more affordable and there’s less competition. People planning to buy for the first time in some of the tougher markets should be prepared to face a more competitive environment, but that doesn’t mean they should count out buying entirely,’ he added.