Top 10 Best Markets for New Home Buyers
NEW YORK ( MainStreet) Pittsburgh, Tampa and Philadelphia led the list of best markets for first time home buyers in 2014.
"These markets are among the top 35 most searched markets on Realtor.com and have median list prices under $250,000," said Steve Berkowitz, CEO of Move, which operates Realtor.
Philadelphia, Fort Worth and Orlando also scored a slot on Realtor's ranking.
"As we head into home buying season, these markets show favorable conditions for first-time buyers, which is encouraging because these buyers are crucial to the housing market," Berkowitz told MainStreet.
Market conditions that are optimal for first time home buyers include popular location, affordability, supply of inventory and steady employment.
In addition to being able to afford a monthly mortgage payment, first time home buyers need to have enough money saved for a down payment.
"Pittsburgh landed first place because of its lowest median list price of $135,000," Berkowitz said.
Data compiled by Local Market Monitor identifies three Texas markets that are expected to experience a rise in home prices, making them prime targets for investors in single family homes as rental properties -- Fort Worth, Houston and Austin.
"The economy has been growing quickly in these markets," said Ingo Winzer, president and founder of Local Market Monitor. "There are lots of renters and there aren't many foreclosed properties to provide competition."
With the unemployment national average hovering at 6.7 %, the Fort Worth-Arlington area has the lowest unemployment rate of the top ten list at 5.4%. New homeowners are better able to hold steady jobs in markets that support their jobs. The more homes to choose from, the less chance of bidding wars during the buying process and the more options new buyers have to find their dream home. At 49%, Realtor's ranking revealed that Orlando experienced the highest year-over-year inventory increase. The Tampa area followed with an inventory change of 33%. The length of time a house stays on the market is an indicator of demand and can create an opportunity for first time home buyers to secure a better deal.
"The Philadelphia, Pennsylvania and New Jersey market had the highest median age of inventory at 141 days, which means less market competition for bidding wars," said Berkowitz.
When renters transition to home owners, they pay property taxes and other fees associated with homeownership that benefit local schools and service.
"Without new buyers, local housing economies stagnate," said Berkowitz. "Unlike move up buyers, new buyers do not add a house to the for-sale inventory but instead reduce local inventory. Shrinking inventories push up prices and home values."
The lower tier of the top ten list includes Dallas, Raleigh-Durham and Phoenix-Mesa. "Unless homeowners at the lowest rung can sell their homes to new buyers, they are unable to buy homes at the next level, and as a result, home values decline and families have to forgo plans to move up," Berkowitz said.