Economic News

LendingTree Highlights Best and Worst Metros for First-Time Homebuyers

Current first-time homebuyers seeking an affordable abode may find their search to be a bit perilous these days. Due to an overall lack of inventory, prices for homes that are for sale have reached record highs. Nevertheless, the site LendingTree has just released its rankings of the best and worst metro areas for first-time buyers.

The latest report was compiled using data from more than 100,000 LendingTree users during the first half of 2021 along with data from a 2019 American Community Survey. To determine their rankings, the site considered several different factors. These included the average down payment amount, the average down payment percentage, the percentage of buyers with credit scores below 680, the percentage of buyers with Federal Housing Administration (FHA) loans, and the percentage of households who spent more than 30% of their salary on housing.

Topping the list for best metros first-time homebuyers was Kansas City, Missouri. This overall win was thanks in part to the area’s $30,219 average down payment and the fact that only 20.70% spent more than 30% of their income on housing. Additionally, 21.10% of KCMO homebuyers had scores below 680.

Coming in second place was Oklahoma City, whose average down payment of $28,777 actually bested Kansas City’s. OKC also had a higher percentage of FHA loans (11.6% compared to KC’s 10.2%). Meanwhile, the top five was rounded out by Louisville, Kentucky; St. Louis, Missouri; and Salt Lake City. Notably, all three of these areas had much higher average down payments than the first and second-place finishers, with each coming in at more than $40,000.

On the other end of the list, some usual suspects were found to be the worst metros for first-time homebuyers. Unsurprisingly, New York took the crown thanks in part to the whopping $91,453 average down payment. Furthermore, 39.1% of homeowners in the area were found to spend more than 30% of their income on housing. Joining New York on the list were a pair of California cities: San Jose and San Francisco. San Jose actually had the largest average down payment of any area on the list, coming in at $156,816. Of course, San Fran wasn’t far behind with a $151,248 average. However, when it comes to the city with the largest percentage of homeowners spending upwards of 30% of their income, it was Los Angeles’ 42.2% that was the worst.

It’s worth noting that, with more companies embracing the possibilities of remote work, it’s possible these top-ranked metros could attract first-time homebuyers seeking good deals. If that does turn out to be the case, it will be interesting to see how these figures change when more buyers flock to the area. In the meantime, homebuyers on a budget who are location independent may want to consider a move to one of these cities or others found on LendingTree’s list.