The locked-in effect has been bandied about for the last couple of years as the reason why the inventory remains thin. But it’s not stopping those who want to pay cash and avoid a mortgage altogether – every area is showing increases in the all-cash purchases.
If you don’t want to leave your local neighborhood, then yes, you’re locked in – the higher prices and rates make it prohibitive to move. But for the homeowners who don’t mind leaving town, they can take their winnings and pay cash for their next house!
Don’t let higher rates stop you. Thirty-eight percent of the homes in America are paid in full – join the club!
First-time home buyers are a growing share of the market, making up half of all home buyers last year, according to Zillow’s Consumer Housing Trends Report. Homeownership is easier to break into in some markets than others, and Zillow has named this year’s best markets for first-time buyers, where their dollars go further and starter homes are relatively plentiful.
Affordability is a tough hill to climb in today’s market, and it is especially steep for first-time buyers who do not have equity from a previous home purchase to tap into. Markets with relatively more affordable rent, more options and less competition for starter homes provide the best opportunities.
Zillow’s 2024 list of the best markets for first-time buyers is based on four metrics:
Rent affordability, as defined by the share of median household income spent on rent.
The share of available inventory on Zillow that the median household can comfortably afford, meaning spending no more than 30% of income on the estimated monthly mortgage cost.
The ratio of affordable for-sale inventory to renter households. More inventory per renter household is an indicator of less competition for each listing.
The share of households age 29-43. More households of similar age means a higher score in Zillow’s ranking.
More affordable rent shortens the time it takes to save for a down payment, and a higher number of active for-sale listings relative to the potential homebuyer population means more options – and more bargaining power – for potential first time home buyers in those markets.
These are Zillow’s 10 best markets for first-time home buyers this year:
St Louis, MO
Home Buying Age Households As a Share of Total Households: 26%
Percentage of Median Household Income Spent on Rent: 20%
Affordable Listings As a Percent of Total For-Sale Inventory: 67%
Affordable Listings To Renter Household Ratio: 3.4 per 100 Renters
Detroit, MI
Home Buying Age Households As a Share of Total Households: 24%
Percentage of Median Household Income Spent on Rent: 21%
Affordable Listings As a Percent of Total For-Sale Inventory: 64%
Affordable Listings To Renter Household Ratio: 4 per 100 Renters
Minneapolis, MN
Home Buying Age Households As a Share of Total Households: 28%
Percentage of Median Household Income Spent on Rent: 20%
Affordable Listings As a Percent of Total For-Sale Inventory: 48%
Affordable Listings To Renter Household Ratio: 2.5 per 100 Renters
Indianapolis, IN
Home Buying Age Households As a Share of Total Households: 29%
Percentage of Median Household Income Spent on Rent: 22%
Affordable Listings As a Percent of Total For-Sale Inventory: 50%
Affordable Listings To Renter Household Ratio: 2.6 per 100 Renters
Austin, TX
Home Buying Age Households As a Share of Total Households: 34%
Percentage of Median Household Income Spent on Rent: 20%
Affordable Listings As a Percent of Total For-Sale Inventory: 23%
Affordable Listings To Renter Household Ratio: 1.3 per 100 Renters
Pittsburgh, PA
Home Buying Age Households As a Share of Total Households: 24%
Percentage of Median Household Income Spent on Rent: 22%
Affordable Listings As a Percent of Total For-Sale Inventory: 63%
Affordable Listings To Renter Household Ratio: 3.7 per 100 Renters
San Antonio, TX
Home Buying Age Households As a Share of Total Households: 31%
Percentage of Median Household Income Spent on Rent: 23%
Affordable Listings As a Percent of Total For-Sale Inventory: 33%
Affordable Listings To Renter Household Ratio: 2.6 per 100 Renters
Birmingham, AL
Home Buying Age Households As a Share of Total Households: 25%
Percentage of Median Household Income Spent on Rent: 22%
Affordable Listings As a Percent of Total For-Sale Inventory: 47%
Affordable Listings To Renter Household Ratio: 4.2 per 100 Renters
Kansas City, MO
Home Buying Age Households As a Share of Total Households: 27%
Percentage of Median Household Income Spent on Rent: 21%
Affordable Listings As a Percent of Total For-Sale Inventory: 51%
Affordable Listings To Renter Household Ratio: 2.2 per 100 Renters
Baltimore, MD
Home Buying Age Households As a Share of Total Households: 27%
Percentage of Median Household Income Spent on Rent: 22%
Affordable Listings As a Percent of Total For-Sale Inventory: 56%
Affordable Listings To Renter Household Ratio: 2.3 per 100 Renters
Urban sprawl in west Phoenix is a tradition and it makes you think that eventually the desert will be paved all the way to California!
We have clients who have befriended Shawn and find her personable and a believer in real estate videos. Here’s her introduction the the best 55+ homes in the west valley:
The San Diego inventory is still woefully low. But most of the feeder areas have more homes for sale, which might make it easier for you to find a good match – and maybe even a better price than you expected?
A couple of years ago, I had a client who thought about moving to Dallas. He rented a house there and moved the family, but didn’t sell his house here. The market was so hot there that he lost several bidding wars and was completely frustrated with trying to buy a decent house at a decent price. They gave up and moved back to the Sandy Bagel. With more listings now, maybe it’s a good time to reconsider.
Same thing below. A few more San Diego houses listed last month, but still well under the 2019 count prior to the pandemic. Other areas where you might move are surging with new listings (red dots), and their selling seasons are just beginning:
The NSDCC sales in March will be about the same as they were in February – from Bill: March sales will be mostly for contracts signed in January and February and mortgage rates increased to an average of 6.8% in February. My early expectation is we will see a sales decrease in March on a seasonally adjusted annual rate basis (SAAR) compared to February. There were two fewer working days in March 2024 compared to March 2023, so seasonally adjusted sales will be higher than the NSA data suggests.
A potential retirement spot’s cost of living is often an important consideration for retirees living on a fixed income. While the cost of housing is factored into the overall Best Places to Retire ranking, U.S. News breaks out especially affordable places to retire into its own ranking, including housing affordability and price parity, the ability to afford everyday goods and services.
The 10 Best Affordable Places to Retire in the U.S. in 2024:
Zillow is guessing that the San Diego market will hold up nicely this year with a 7%-8% appreciation rate – which, according to their map, is a lot better than many of the other higher-end markets around the country!
Here’s a list of the 15 best places in Arizona where retirees can enjoy life on a Social Security check alone. In order to do this, they took the median Social Security benefits for 2023, doubled it for couples, and then set out to find cities where the rent doesn’t take up more than half of that total.
Here are the 15 best places to live in Arizona on just a Social Security check:
