SJ metro worst in country for first time home buyers, says report
Do we repeat ourselves? Constrained housing supply makes Silicon Valley the bottom feeder on a Forbes listing for affordability and market tightness. Brenda Richardson reports.
"Buying a home can be challenging in any competitive market, but there are certain metro areas that really give first-time home buyers a run for their money, according to a new study by Bankrate.com.
'Young home buyers better be ready to compromise,' said Bankrate data analyst Adrian Garcia. 'Affordability and convenience might be the trade-off to moving to a major metro with a little less culture or popularity. Buyers have to find the balance that works for them and their financial situation. Make sure you’re making a sound investment. You can always upgrade later.'
"The study reviewed the 50 largest metro areas in the country based on several factors a first-time buyer should consider when purchasing a home, including affordability, job market, market tightness, culture and safety.
'We measured market tightness, the number of days a house sat on the market in 2018 with the idea that the less time a house is on the market the more competition you’re seeing,' said Garcia. 'The market is just going to be tight and competitive for a number of buyers.'
"California is home to several of the 10 worst metros for first-time buyers that were evaluated, including Los Angeles, Sacramento, San Jose, Riverside-San Bernardino and San Diego.
"The ranking was compiled using measures related to affordability, culture, job market, market tightness and safety. Bankrate used the most recently available data for the 50 most populous metropolitan areas.
1. San Francisco reigns as the worst area for first-time home buyers. Buyers in the counties that make up the San Francisco metro area need an annual income of $289,147, on average, to buy the median priced home in their market, according to Attom Data Solutions. The price of housing here makes homeownership unattainable for many prospective first-time buyers. Even in today’s strong job market, 25- to 44-year-olds in this metro area are only earning a median income of $106,151, according to the U.S. Census Bureau.
San Francisco certainly has big city appeal, especially for those looking for diversity, access to the arts and trendy restaurants. But all that comes at a high price for home buyers in the metro area. San Francisco ranked second-to-last for affordability (49) and market tightness (49). The metro’s low score for safety (43) is also concerning. Although San Francisco is booming with culture (9) and the job market ranks in the top-half (24), potential buyers might want to think about a better location for their first home.
2. Although the Los Angeles metro area scored high for culture and fared well in safety, it received low marks in all other categories.
3. High home prices and tight inventories make the Sacramento, California market challenging for typical first-time buyers.
4. San Jose, California came in last place for affordability and market tightness. “Prospective buyers in the San Jose metro have to be ready with strong credit scores and mortgage applications in order to attain homeownership,” said Garcia. “The area has the tightest housing market out of the 50 major metros we analyzed.”
San Jose is also the least affordable metro based on a look at how much income is needed to buy the median priced home, the property taxes in the area relative to its peers and how many 25- to 44-year-olds were renting versus homeowners. Sixty-two percent of 25- to 44-year-olds are renters in the San Jose metro. Buyers in the counties that make up the San Jose metro need an annual income of $308,178, on average, to buy the median priced home in their market, according to Attom Data Solutions.
This article originally appeared in Forbes. Read the whole thing here.
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