Grand Rapids Cracks Top 5 as Best City for First-Time Home Buyers
Many people are aware of the challenges we are facing today in the real estate market. Inventory has reached a record low, home prices continue to skyrocket and mortgage rates have been on the rise recently. These factors make it even more challenging for first-time home buyers who lack the funds to compete with buyers who have previous home sales and liquid assets to write enticing offers. But some housing markets are more favorable to first-time home buyers than others.
Researchers from LendingTree studied the nation's 100 largest cities to determine the Best Cities for First-Time Homebuyers. This list was based off of several factors such as:
Average down payment amount
The share of buyers using an FHA mortgage
Average down payment percentage
Percentage of buyers who have less than prime credit (below 680)
The share of homes sold that the median income family can afford (Housing Opportunity Index)
Average FHA down payment as a percentage of average down payment for all loans
Grand Rapids has reached the top of another list yet again, ranking as the 3rd best city for first time home buyers. According to the LendingTree, Grand Rapids tops the rankings for non-prime credit share of FHA borrowers at 59% and FHA benefit with a down payment at just 22% of the amount paid by other borrowers. In other words, 59% of buyers in the Grand Rapids market had a less than prime credit score (lower than 680), yet were able to leverage FHA loans to compete with conventional buyers. FHA loans can be a great option for lower and middle income borrowers by allowing smaller down payments and lower closing costs.
Grand Rapids high ranking is also due to it's affordability, which ranked 4th last year in U.S. News 25 Best Affordable Places to Live with an average of 25.36% of annual household income going towards housing and utilities.
Here are the top 10 cities for first-time home buyers
Little Rock, AR
Grand Rapids, MI
In contrast, Denver, Colorado was ranked the worst city for first-time home buyers. Despite being consistently one of the hottest real estate markets in the nation, first-time buyers struggle to finance the significant price tags. In fact, buyers in Denver have an average down payment of $66,806, or 18% of the home price. Even the FHA down payments are eye popping at an average of $22,841. Ouch!
Here are the top 10 worst cities for first-time home buyers
New York City, NY
San Francisco, CA
Las Vegas, NV
Los Angeles, CA