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Where are first-time buyers finding success?

July 20, 2018

The millennial generation is truly coming into its own in the housing market, as more young adults gained the power to buy over the past few years. This demographic group, most of whom are buying for the first time in their lives, now makes up one of the largest single chunks of the homebuying population, and it's a trend that's expected to continue for some time to come.

"First-time buyers scooped nearly 2 out of every 5 homes."

However, there are some parts of the country where first-time shoppers are finding more success in achieving their dreams of homeownership than others, according to new analysis from Wallethub. While first-time buyers scooped nearly 2 out of every 5 homes purchased last year, there are some markets where the housing situation is far better suited to their commonly shared needs.

A closer look
Of the 300 largest metro areas in the U.S., the one that is most ideal for millennials based on affordability, activity in the local market and quality of life is Broken Arrow, Oklahoma, located just outside the burgeoning city of Tulsa, Wallethub's analysis found. While its affordability - based on factors such as home prices, insurance costs, cost of living, etc. - was relatively middle-of-the-pack (55th out of 140), the strength of the market there ranked 26th, and quality of life was 11th.

Also in the top five were Tampa, Florida; Centennial, Colorado (near Denver); Boise, Idaho; and Grand Rapids, Michigan, the report said. However, the two markets with the most affordable home prices in the country were Akron and Toledo, Ohio, while all of the bottom five were located around major cities in California.

Meanwhile, mortgage lenders and builders say that first-time buyers continue to fuel their business, highlighting just how important young adults have become in recent years when it comes to pushing the market forward, according to National Mortgage News. The builder/lender KB Home recently saw net income increase 80 percent year-over-year, as first-time buyers scooped up more than half the homes the company put up through the three-month period ending May 31.

The average down payment on mortgages for homes the company constructed came to about 12 percent, potentially because of how increasingly aware consumers are of rising mortgage rates, the report said.

What to consider
While many young adults may now be thinking of getting into the housing market - and with rates and prices both slated to rise for some time to come, experts agree now is the time to buy - there are a number of issues they need to consider when making a purchase, above and beyond the affordability of a given property, according to Forbes. For instance, location is still vital in real estate, and while millennials may be able to find affordable properties farther away from their jobs, they have to weigh both the cost and the hassle of potentially having to commute for an amount of time they would end up considering to be "too long" after a while.

Likewise, many millennials may be able to keep the cost of buying a home down by purchasing a classic fixer-upper, but it might be wise to consider the cost of all the repairs that will need to be made and weigh that against the size of the discount obtained, the report said. Above and beyond the cost of the materials involved in those repair efforts, it's also vital for would-be owners to think about how much time and effort the repairs will take, as well as the cost of hiring professionals to do work they are not qualified to do themselves.

In addition, it's vital that young adults make sure all their finances are in good order when they attempt to buy a home, putting together sizable savings for the down payment and building strong credit profiles to ensure that everything goes as smoothly as possible in the mortgage process, according to the Baltimore Post Examiner. A higher down payment will likely also come with the added benefit of lowering monthly mortgage costs over the life of the loan, and better credit scores bring down the rate buyers can expect to pay. Taken together, these considerations could end up lowering buyers' long-term costs by tens of thousands of dollars.

When getting into the housing market, it's wise for those without experience in making a purchase to lean heavily on the advice of real estate and finance professionals as they navigate every step of the home sales process. Doing so could help them avoid common pitfalls and find success when getting into the market for the first time ever.

 

 

 

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