These Cities Are The Worst For First-Time Homebuyers

First-time homebuyers are getting no favors from the nation’s out-of-balance residential real estate market.

While sky-high home prices and rising mortgage rates are a threat to any homebuyer these days, it’s markedly worse for younger homebuyers who literally can’t get a foot in the door.

The scenario is so toxic for first-time homebuyers that it’s taking a toll on their mental health.

According to a new study by Zillow, 50% of homebuyers say the purchase process left them in tears, with Gen Zers and millennials — many of whom are first-time home buyers — far more likely to cry at least once during their home-buying journey.”

Apparently, the younger the buyer the more tears were shed over trying to buy a home. In fact, more than 65% of Gen Z buyers and 61% of millennial buyers cried at least once when going through the process of purchasing their home.

While startling, that reaction isn’t surprising given the massive uphill climb first-time U.S. homebuyers face right now.

As Zillow points out, in a low-inventory market, homes are receiving multiple offers and often sell for over the list price. The home services company reports that 60% of sellers are getting at least two offers on their home, and nearly half of all homes sold in the U.S. in April 2022 went for over the asking price, up from 37% a year ago.

California Screaming

While that situation is bleak enough for first-time property buyers, it gets worse depending on where a buyer wants to reside.

That’s the takeaway from a new study by Bankrate that lists the worst and best US. Cities for first-time homebuyers.

The study ranked the 50 largest metro areas in the U.S. based on several factors that a first-time homebuyer should consider when purchasing a home. That includes:

· Affordability (30%)

· Employment factors (20%)

· Housing market tightness (20%)

· Safety (20%)

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· Wellness and culture (10%).

What Bankrate found was that one U.S. state held five of the top 10 “worst cities” for first-time homebuyers.

“Five of the ten worst areas for first-time homebuyers are located in California, which in addition to Los Angeles, includes Riverside, San Jose, San Francisco, and San Diego,” the report stated. “Several California metros came in at the bottom in affordability, including San Jose, San Francisco, San Diego, Sacramento, and Riverside.”

Basically, general unaffordability, long commutes to work, and low inventories are all working against Golden State homebuyers right now.

“Though the average national home price is around $450,000 at present, the average price in Los Angeles is over $1 million and the affordability gap continues to widen,” Erin Sykes, chief economist at Nest Seekers International, told

Pittsburgh took the top spot in the study, ranking #1 in the US as a place for newbie buyers to land their first home. Minneapolis, Cincinnati, Kansas City, and Buffalo round out the top five cities.

The Way Forward for New Homebuyers

If there’s one sliver of hope for first-time buyers these days, it’s that remote work allows new buyers to “live on a fatter paycheck in cheaper areas,” said Bankrate analyst Jeff Ostrowski.

Other than that, first-time homebuyers need to be resourceful in attacking an unyielding residential home market, especially in low-inventory hot spots like California.

“If possible, look outside of the major metro areas, especially if you are able to work remotely,” Sykes said. “If that’s not an option, do your research on up-and-coming towns close to the most competitive ones. Look to where supermarkets are opening and shopping centers are expanding, as these are the first signs that an area will appreciate in the future.”

For new buyers, knowledge and preparation are vital when buying in tough real estate markets.

“Try to obtain a mortgage loan pre-approval early,” Sykes said. “You can lock in a mortgage rate before they continue to increase. Doing this immediately can buy yourself 30-60 days in your home search.”

Additionally, make sure you get the total cost picture before you make any home purchase offers, as well.

“Be sure to consider taxes, HOA fees, and insurance costs on each individual property so you minimize the potential for hidden costs,” Sykes said. “Pre-construction or properties that need a little love tend to be more favorably priced than those that are move-in ready.”

It’s also a good idea for first-time homebuyers to clean the household balance sheet.

“Stay out of bad debt, especially consumer debt like credit cards, personal loans, store credit cards,” said Eddie Martini, strategic real estate advisor at Real Estate Bees in Sacramento, Cal. “These are all pure liabilities that charge you high interest that get in the way of home ownership.”

Only use your credit cards on necessary purchases like gas and groceries and then pay off the balance due every month prior to the creditor charging you any interest, Martini advised.

“This allows you as the consumer to earn any bonus points or other perks from the credit card company and still avoid paying high interest,” Martini told TheStreet. “It also shows the credit bureaus that you can borrow and pay back money consistently. The higher your credit score the lower your interest rates typically will be when you secure your new mortgage.”

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