First-time homebuyers have a mounting challenges ahead of them: rising mortgage rates, still limited home supplies throughout the country and home prices that haven’t eased that much.
So Bankrate.com has provided a guide for this group of mostly millennials. BankRate’s report provides the best and worse states for first-time homebuyers, taking into consideration such metrics as housing affordability, the local job market for young adults, market supplies and credit availability.
The best-performing states are mostly Western and Midwestern states with limited degrees of urbanization. Iowa, Utah and Minnesota make up the top three.
At the bottom of the ranking are New York, Hawaii and California.
Affordability is a bigger hurdle for first-time buyers in states with large and growing metro areas, says Rolf Pendall, co-director of the Metropolitan Housing and Communities Policy Center at the Urban Institute.
“When you have a state like California where the housing prices are really high and the rental housing is also really expensive, unless you have access to wealth from some source that’s not your job, it’s going to be really hard for you to amass enough of a down payment, and also the kind of credit that you need to get into the housing market,” Pendall says.
Mortgag principal and interest payments in the least affordable states consumed more than a third of household income, versus just 13 percent in the most affordable states, Bankrate found.
Here is Bankrate’s full report.