Believe San Francisco or New York City are the most challenging place to buy your first home? Nope–first-time home buyers will fight a lot more in Denver. Really.
This unexpected finding comes from LendingTree’s just-released list of the greatest and worst cities for first-time home purchasers. LendingTree researchers rated the 100 largest U.S. cities not only by the purchase price of homes, but also by other standards such as the typical down payment, the proportion of buyers who have a credit score below 680, and the number of homes sold the median-income family are able to afford.
And Denver, it turns out, actually gives first-time home buyers a run for their money, due in part to sizable down payments –on average $66,806, or 18% of a home’s price.
“This makes it harder for first-time home buyers who may need years of savings to compete,” Brian Karimzad, vice president of research at LendingTree, informs realtor.com®. Even FHA borrowers, that typically have smaller down payments compared to those taking out conventional loans, are putting more money down in Denver than in other metros, ” he says.
Colorado’s housing market as a whole is also one of the tightest in the nation, based on some 2017 report from Bankrate.com. Both Denver and Colorado Springs frequently make realtor.com’s monthly list of the hottest marketsfor property in the U.S.
“Something I heard again and again is that first-time home buyers suffer in a tight market. Sellers are getting multiple offers,” Bankrate.com analyst Claes Bell told the Denver Post. “Because first-time buyers tend to be financing a large amount of their purchase relative to other buyers, they may get short-changed.”
Of course, New York City and San Francisco are also on the record of challenging markets for first-time home buyers, followed by a few more surprises like Austin, TX, and Las Vegas. Both are “very popular smaller cities that may be seeing external buyers crowding out the local population,” Karimzad says.
LendingTree’s data imply that the worst cities for home buyers have a tendency to have some things in common: They’re markets where home costs and down payments are large, the share of FHA loans is low, and home prices exceed what the average family income are able to afford.
Here’s a full rundown of the most difficult cities for first-time home buyers.
Worst cities for first-time home buyers
- Denver, CO
- New York City, NY
- San Francisco, CA
- Austin, TX
- Las Vegas, NV
- Los Angeles, CA
- Oxnard, CA
- Boston, MA
- Sacramento, CA
- Miami, FL
Among the most accessible cities for first-time home buyers, Little Rock, AR, maintained the No. 1 spot. This Southern city sees a low average down payment of only $24,896, or 12% of a home’s price.
“Lower down payments increase access for first-time buyers,” states Karimzad. He also says low fico ratings are a factor from the Little Rock housing market. “Competition is not as fierce for first-time home buyers in Little Rock, since 50% of home buyers have less-than-prime credit.”
A handful of Rust Belt cities also appeared on the list of best cities for first-time home buyers. The motive: Homes there are still affordable, since property prices haven’t outpaced the growth in the economy, making them ideal locales for first-time home buyers.
Here are the other cities that made the record.
Best cities to get first-time home buyers
- Little Rock, AR
- Birmingham, AL
- Grand Rapids, MI
- Youngstown, OH
- Winston, NC
- Dayton, OH
- Indianapolis, IN
- Scranton, PA
- Pittsburgh, PA
- Cincinnati, OH