Despite the coronavirus pandemic that overtook the country during 2020, 40 percent of all housing purchases last year were made by first-time buyers, a 14 percent increase over 2019.
A new study from WalletHub looks at 300 cities nationwide of varying sizes to rank the best places for new home buyers based on key indicators.
“Where a home is located is just as important as what features it has,” according to Adam McCann, the study’s author. “If the neighborhood is unpleasant, it can sour the experience of a great home. Potential buyers may want to narrow their search down to an area with a good reputation before getting into housing details.”
The increase in first-time buyers last year can be attributed to two factors: a dramatic drop in interest rates and the decision by companies to allow employees to work remotely on a permanent basis.
According to WalletHub’s findings, Chesapeake, Va., ranks as the best place for a first-time homebuyer with an overall score of 65.15.
The rest of the top 10 are: Gilbert, Ariz., Lincoln, Neb., Cape Coral, Fla., Boise, Idaho, Hampton, Va., Peoria, Ariz., Virginia Beach, Va., Norfolk, Va., and Gilbert, Ariz.
Of the 10 worst cities for first-time home buyers, the bottom nine are all in California: Berkeley, Oakland, San Francisco, Santa Monica, Los Angeles, San Mateo, Santa Barbara, Glendale and Burbank. The other city in the bottom 10 is Boston.
In assembling its data, WalletHub ranked cities based on 22 metrics covering affordability, real estate market, and quality of life.
Affordability includes the average cost of home owner’s insurance, cost of living, and local property taxes.
The real estate market takes into account factors such as foreclosure rates, mortgage lenders and real estate agents per capita, and building permit activity.
Quality of life covers things such as school system quality, weather, and crime rates.
Patricia Ryan, a finance and real estate professor at Colorado State University, told WalletHub that the key factor a first-time homebuyer should keep in mind is their exit strategy, since most first-time buyers will likely step up to a larger home after a few years.
“Will the home and neighborhood be attractive to future first- or second-time buyers?” she said. “In that light, many first-time buyers are not as concerned about school districts if they do not have children, but their prospective buyers may have school districts high on their list.”
Ryan suggests first-time buyers make a list of “musts and wants” not only for themselves but also for potential future buyers.
By Ted O’Neil