Dive Brief:
- Realtor.com has released its list of the 10 best cities for first-time homebuyers ages 25-34, and Portland, ME, Philadelphia and St. Louis top the list.
- The real estate data site also included Allentown, PA; Albany, NY; Harrisburg, PA; Baton Rouge, LA; Dayton, OH; Minneapolis; and Virginia Beach, VA, as worthy alternatives to hot but pricey markets like Seattle, San Francisco, Portland and Dallas.
- In making its selection, Realtor.com looked at the 100 largest U.S. metros and evaluated them based on affordability, level of housing inventory, mortgage availability, employment growth and livability — meaning how many restaurants, schools, retailers, medical facilities and other amenities there are per 1,000 households.
Dive Insight:
According to Realtor.com, first-time homebuyers are locked out of many of the trendiest markets because low inventory conditions have driven prices to an unaffordable level. In fact, a November National Association of Realtors report found that the number of first-time buyers was at its lowest level in 30 years, at 32%. That means bad news for homebuilders trying to reach the coveted demographic.
In February, the National Association of Home Builders also reported that more than 20% of adults ages 25 to 34, approximately 8.8 million, lived with their parents as of 2014, up from 12% in 2000. The NAHB said this trend has kept nearly two million millennials out of the housing market, likely creating a hole in the number of first-time homebuyers.
As for the reasons Realtor.com picked the cities on the Top 10 list, it said each scored high according to the criteria, particularly in employment and median home prices. Portland, ME, for example, which claimed the number-one spot, has an unemployment rate of 3.3%, which Realtor.com said is well below the national average of 5.2%
Philadelphia, on the other hand has a higher unemployment rate, but its crime rate plummeted 20% in recent years, and the annual flood of New Yorkers moving in to escape the Big Apple’s high prices means the city can offer big-city amenities for a more reasonable price. St. Louis is near the top of the list as well because, aside from a low median home price of $164,000, eight Fortune 500 companies call the city home, and its job market is starting to show some movement in the right direction, according to Realtor.com.
