Los Angeles is America’s ‘worst’ metro area for first-time home buyers — but you might be surprised at the ‘best’
Angelenos, congratulations — you officially live in one of the worst metro areas for first-time home buyers, according to a new study from Bankrate.com.
Of the 50 largest metro areas surveyed, Los Angeles ranked 49th in affordability, 48th in employment factors, 39th in housing market tightness, supply of homes for sale across national having fallen to historic lows during the COVID-19 pandemic, and 30th Safe. But on the other hand, LA ranked third for wellness and culture.
Los Angeles was ranked “the worst metropolis for first-time buyers”, followed by Las Vegas, Seattle, Riverside and San Jose.
The typical seasonally adjusted home value in the United States hovered at $349,816 in May 2022, which includes the average home price level, according to Zillow. Home values rose 20.7% nationally over the past year, he added.
To put this in context: the typical house home values in los angeles is $1,007,124, Zillow added, with home values up 17.1% over the past 12 months.
Widening accessibility gap
But Los Angeles, Riverside and San Jose aren’t the only cities in California that are proving out of reach, especially for first-time buyers. According to personal finance site Bankrate, 10 of the worst metropolitan areas for first-time home buyers are located in California, including San Francisco, San Diego and Sacramento.
“The housing boom of the past two years has widened the affordability gap between low-cost and high-cost metro areas,” Jeff Ostrowski, Bankrate’s senior mortgage reporter, said in a statement.
“But with remote work becoming the norm for white collar workers, it’s possible to keep the top salary while living in a cheaper area,” he added. “For this study, we looked not only at housing affordability, but also at various other factors, including local unemployment rates, commuting times, crime rates and public health.”
The best places to buy a house
But there are positives, if buyers are open to relocation, according to the survey.
Pittsburgh, for example, was the “best” metro for first-time home buyers, scoring points for affordability, lack of tightness, and safety. (Philadelphia home prices have risen 6.5% over the past 12 months to $233,563 in May 2022Zillow Z,
To gauge the tightness of the housing market, Bankrate looked at the average days on market for homes for sale for March 2022, as provided by Realtor.com, and the year-over-year change in housing inventory through March. 2022. (Realtor.com is owned by the same parent company as MarketWatch.)
Pittsburgh was followed by Minneapolis, Cincinnati, Kansas City and Buffalo as the top metropolitan areas for first-time buyers. Bankrate also highlighted Philadelphia as a housing market not only more affordable than many western cities, but also ranked highly for its relative safety.
A myriad of sources
The survey used a variety of sources, including the US Census Bureau, the US Labor Department, and violent crime and property crime data released by the Federal Bureau of Investigation.
To calculate affordability, the researchers looked at the typical income needed to qualify for a mortgage in each metropolitan area, based on the median home price in the first quarter of 2022, as reported by Attom Data Solutions; a 10% deposit; a 5% mortgage rate on a 30-year loan; plus a debt-to-mortgage income ratio of 25%.
It also cross-checked those numbers with the U.S. Census Bureau’s most recent estimates of the median income of households headed by people aged 25 to 44 in each metro area, and calculated the homeownership rate for seniors. from 25 to 44 years old in each metropolitan area.
For the wellness rankings, Bankrate used the 2020 Community Wellness Index published by digital healthcare company Sharecare SHCR,
which examines access to health care, food and community services, including libraries and churches.
The culture ranking examines the number of arts and entertainment outlets and cultural institutions per capita, based on Bankrate’s analysis of US Census Bureau data.