Edited by Diana Olic | @diana_olick
In the rush to get in on the bargains of the housing crash, first-time home buyers were largely left out. Investors swarmed the most distressed markets, spreading their cash like fertilizer and pushing home prices up far faster than most expected. In less distressed markets, first-time buyers were still hampered, as the pendulum swung hard from loose lending to too-tight credit.
Now, as the spring season brings more listings to the national market and as investors seem to be pulling back a bit, first-time buyers are testing the water again. Some markets, like San Francisco, will likely be cost-prohibitive, while others, like Philadelphia, could offer easier entry to home ownership.
“First-time home buyers were put at a disadvantage against all-cash buyers, but with interest rates still staying low, with the marketplaces having risen fairly decently, you’re seeing the opportunity where it’s less of an investment for investors but a good opportunity for first-time home buyers,” said Steve Berkowitz, CEO of Move Inc. operator of Realtor.com.
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Realtor.com ranked the top 10 markets for first-time buyers, using five factors to judge the best: market popularity, prices, inventory, time on market and employment. Pittsburgh, Tampa, Fla., and Philadelphia, ranked highest, mostly because their prices have not spiked much and their unemployment rates are lower than the national average.
Interestingly, Phoenix also made the top 10. Phoenix was one of the hardest hit housing markets during the crash, with prices literally falling by more than half from peak to trough. Investors targeted the market early, buying thousands of distressed properties at deep discounts and driving prices up by double-digits very quickly. Still, Berkowitz said it’s a great place for first-time buyers now.
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“Investors are looking for a certain level of return,” he said, and they’re not getting it in Phoenix anymore. Large-scale investors have moved on to other markets, like Atlanta and Chicago, where discounts are better.
Realtor.com released a list of the top markets for the first time home buyer. CNBC’s Diana Olick reports this is a crucial segment of the industry.
Top 10 Markets for First-Time Home Buyers by Rank