North Texas is a hot area for first-time homebuyers, says Realtor.com in a new ranking released today. The data, pulled from Realtor.com searches and U.S. Bureau of Labor statistics, ranks the Fort Worth-Arlington MSA fourth and the Dallas MSA eighth in their list of top 10 markets for first-time homebuyers. Pittsburgh, Pa.; Tampa-St. Petersburg-Clearwater, Fla.; and Philadelphia, Pa.; were the top three markets for first-timers to buy.
“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,” said Steve Berkowitz, CEO of Move, Inc. operator of Realtor.com. “First-time buyers have a widespread impact on the local housing markets. 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.”
But, why are these markets so popular with folks who’ve never bought a house before? Here’s what the study measured:
Market dynamics play a major role in the level of stress taken on by buyers, especially to buyers new to the process. In this report, realtor.com® examined five key factors including market popularity, prices, inventory, time on market and employment, to see which markets currently are the best for new buyers.
Location, location, location: Market popularity is an important consideration for first-time buyers. It is common for owners to become “move up” buyers and purchase a larger home a few years after a first home purchase. Buying a home in popular markets increases the likelihood of making money on a first home.
Affordable list prices: One of the biggest barriers to homeownership is affordability. Home owners not only have to be able afford a monthly mortgage payment, but have enough saved for a down payment. Less expensive homes are typically a better fit for first-time buyers as they require less of a down payment and have lower monthly mortgage payments.
Supply of inventory: Inventory shortages can often spark bidding wars between buyers where investors or buyers with more income can price out firsttime buyers. Markets with a steady supply of inventory are less likely to involve bidding wars.
Reasonable time on market: Median age of inventory is a clear indicator of demand in a market. High demand is another factor that prompts bidding wars and makes it difficult for first timers to get the home of their dreams. Additionally, first-time home buyers should consider the specific amount of time a home that has been on the market, they may have an opportunity for a better deal as sometimes sellers are required to price homes more competitively in order to close.
Steady employment: Unemployment rates affect all aspects of the economy, including first-time buyers. In order to pay for their mortgages, new buyers need to work and hold steady jobs in markets that support their job.
Well, I can see how Fort Worth-Arlington pulled ahead of Dallas with these measurements, as our supply of inventory is extremely low, which also affects the “reasonable time on market” metric. Surges in prices are another side effect to low inventory. The Fort Worth-Arlington median listing price is $175,000, compared to Dallas’ $224,900, which is up 3.61 percent and 12.45 percent year-over-year, respectively. That’s an enormous surge in prices for Dallas.
We’ve talked about how high prices are pushing out first-time homebuyers. Are you seeing more or fewer first-timers this season?