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Orlando is the Best Market for First-Time Homebuyers; West Coast Markets Tougher for the First-Time Buyer

In the best markets for first-time buyers, home shoppers will find more affordable homes and a less competitive market

- Most of the best markets for first-time homebuyers are in the Southeast or Midwest

- A 5 percent down payment in the Bay Area is larger than a 20 percent down payment in most of the best markets for first-time buyers

- Nearly half of all homebuyers are doing so for the first time

May 12, 2017

SEATTLE, May 12, 2017 /PRNewswire/ -- First-time homebuyers will have better luck in the Southeast if they are looking for a more affordable home, according to a new analysis from Zillow®. Orlando and Tampa top the list as the best markets for first-time buyers, with affordable homes and relatively more inventory than other markets. Also making the list are San Antonio, Atlanta, and Dallas. These markets are less competitive, and buyers will see strong growth over the next year as they begin to accumulate equity.

Zillow's list of the best markets for first-time buyers is based on five metricsi:

  • Lower median home value for a more affordable down payment
  • Strong home value forecast as an indicator of building equity
  • Higher inventory-to-household ratio to capture available supply
  • Shorter Breakeven Horizon to show a financial advantage of buying over renting
  • Greater share of listings with price cuts to indicate a less competitive market

While first-time buyers make up nearly half of recent buyers, according to the 2016 Zillow Group Report on Consumer Housing Trends, having enough saved for a down payment could be holding first time buyers back in certain markets. More than two-thirds of renters say that saving for a down payment is the biggest barrier to homeownershipii. In all but three of the 10 best markets for first-time buyers, the median home value is lower than the national median home value, which means they require less money up front as a down payment.

The Bay Area and Pacific Northwest have strong job markets, but new buyers will have a tough time entering the market due to low inventory and high home prices – buyers in these areas will have to come up with more than $70,000 as a down payment. However, those looking to buy in Florida only need to put about $40,000 down on a median home.

"As millennials reach the typical home buying age, they are coming into a tough housing market with low inventory and lots of competition," said Zillow Chief Economist Dr. Svenja Gudell. "These markets have more favorable conditions for first-time buyers to become homeowners. More challenging metros aren't out of reach for new buyers, but they should be prepared to face a more competitive buying environment."

Ten Best Markets for First-Time Homebuyers

1.       Orlando, Fla.
2.       Tampa, Fla.
3.       Indianapolis, Ind.
4.       Las Vegas, Nev.
5.       San Antonio, Texas
6.       Pittsburgh, Pa.
7.       Atlanta, Ga.
8.       Detroit, Mich.
9.       Dallas, Texas
10.     Cleveland, Ohio

A 5 percent down payment in the Bay Area is larger than a 20 percent down payment in most of the best markets for first-time buyers. For buyers who can come up with a down payment, low inventory and few price cuts make these markets especially competitive.  

First-time buyers are more likely to exceed their budget than repeat buyersiii. Zillow Group recently launched a new consumer brand, RealEstate.com, aimed at first-time home buyers, that enables them to search and compare homes based on an "All-In Monthly Price" which factors in costs like mortgage, property tax and utilities to have a better understanding of a home's true cost.  

Metropolitan Area

 Zillow
Home Value
Index
March 2017

Breakeven
Horizon
Q1 2017

 Inventory

 Households

 Annual Forecasted Home Value Appreciation (%)

Share of
Listings with
a Price Cut

Orlando, FL

$202,900

1 year, 11 months

10,344

845,295

3.8

17.4

Tampa, FL

$183,300

1 year, 10 months

14,998

1,166,704

3.2

18.8

Indianapolis, IN

$137,300

1 year, 6 months

7,706

755,100

3.0

13.1

Las Vegas, NV

$219,200

2 years, 1 months

13,012

740,966

4.8

12.0

San Antonio, TX

$158,500

1 year, 11 months

7,444

791,273

3.0

17.2

Pittsburgh, PA

$135,700

1 year, 11 months

10,830

990,355

2.5

14.9

Atlanta, GA

$175,800

1 year, 9 months

28,888

2,028,705

3.1

12.4

Detroit, MI

$138,700

1 year, 7 months

13,919

1,674,251

3.2

12.7

Dallas-Fort Worth, TX

$205,300

1 year, 8 months

16,331

2,479,995

4.4

13.7

Cleveland, OH

$132,400

1 year, 11 months

10,045

849,475

1.8

14.1

Cincinnati, OH

$151,300

1 year, 9 months

6,160

832,607

2.7

14.2

Chicago, IL

$208,400

2 years, 3 months

37,367

3,470,993

2.6

16.7

Kansas City, MO

$155,600

1 year, 8 months

6,616

814,092

2.9

11.6

St. Louis, MO

$149,300

2 years, 4 months

12,373

1,108,303

1.5

15.0

Houston, TX

$174,500

2 years, 4 months

24,960

2,292,992

1.5

17.9

Philadelphia, PA

$216,000

2 years, 7 months

26,597

2,233,752

2.3

17.3

Riverside, CA

$322,700

2 years, 5 months

14,462

1,343,526

3.8

13.4

Charlotte, NC

$170,600

1 year, 10 months

7,793

905,696

3.0

12.0

Miami-Fort Lauderdale, FL

$249,700

2 years, 8 months

46,142

2,077,362

0.6

15.7

Austin, TX

$267,500

2 years, 5 months

6,701

723,914

3.4

15.0

Phoenix, AZ

$232,700

3 years, 0 months

21,607

1,608,722

1.7

20.0

Minneapolis-St Paul, MN

$241,900

2 years, 1 month

9,101

1,354,766

3.5

12.7

Columbus, OH

$161,700

1 year, 9 months

4,858

772,304

3.0

11.2

New York, NY

$411,300

2 years, 6 months

76,798

7,125,065

3.8

11.2

Baltimore, MD

$259,200

2 years, 10 months

11,253

1,037,443

1.8

16.1

Sacramento, CA

$361,000

2 years, 5 months

4,276

809,295

4.7

8.4

Seattle, WA

$426,300

2 years, 3 months

6,181

1,437,222

4.8

5.6

Denver, CO

$362,800

2 years, 5 months

6,130

1,075,919

3.3

9.2

Boston, MA

$419,900

2 years, 9 months

9,903

1,782,655

3.1

10.3

Washington, DC

$382,900

4 years, 6 months

17,478

2,172,310

1.2

13.9

Portland, OR

$359,800

2 years, 11 months

5,306

901,402

2.7

9.8

San Diego, CA

$532,000

4 years, 6 months

5,976

1,113,610

0.9

10.6

Los Angeles-Long Beach-Anaheim, CA

$601,900

4 years, 8 months

17,364

4,315,637

0.8

10.7

San Jose, CA

$986,000

5 years, 1 month

1,596

651,352

0.9

7.0

San Francisco, CA

$843,200

4 years, 11 months

4,155

1,689,907

0.6

6.2

Zillow

Zillow® is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Launched in 2006, Zillow is owned and operated by Zillow Group (NASDAQ:Z and ZG), and headquartered in Seattle.

Zillow is a registered trademark of Zillow, Inc.

     

i The First-time Home Buyer Index, ranging from 0 to 10, captures a balance of five metrics: low median home values for an affordable down payment, a strong home value forecast to indicate a good start to growing equity, a larger inventory-to-household ratio to capture available supply, a greater share of listings with price cuts to surface less competitive buying experiences, and a faster breakeven to demonstrate a strong incentive to buy over rent. These five metrics are ordered and metros are scored on a scale from 0 to 10 along a uniform distribution. These five scores are then averaged and the average re-scaled to range from 0 to 10.

ii https://www.zillow.com/research/down-payment-hurdle-zhar-14790/

iii https://www.zillow.com/research/zillow-group-report-2016-13279/#buyercharacter

 

 

SOURCE Zillow

For further information: Lauren Braun, Zillow, press@zillow.com


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