Buyer beware! These are the 7 worst cities to try to snag a house right now

  • The US housing market is wild right now, with prices hitting record highs, inventory at all-time lows, and bidding wars commonplace.
  • Online mortgage marketplace LendingTree ranked the US metro areas with the most competitive homebuyers.
  • The study looked at the average size of buyers’ down payments, the percentage of credit scores at or above 720, and the share of buyers who shopped for a mortgage in advance.
  • See more stories on Insider’s business page.

Over the last year, the coronavirus pandemic has untethered people from their offices and redefined what makes an ideal home base, prompting mass migrations across the country from coastal hot spots to second-tier cities, suburban enclaves, and what were once seasonal vacation hideaways. Fueled by low mortgage rates, millennials and others eager to put down roots and secure more space for lockdown snapped up homes.

The demand, coupled with an extremely small number of houses for sale, has sent property markets across the US into a frenzy.

Some startling statistics: A typical home on the market gets snatched up in less than a week. The typical American house price keeps hitting record highs, which brokerage Redfin finds “concerning.” The average homebuyer now needs to offer above asking price to score a property.

There are also 40% fewer homes on the market than last year — so competition among homebuyers is heating up.   

A recent report by LendingTree analyzed more than 750,000 mortgage loan requests that came through its marketplace between March 1, 2020, through March 24, 2021 to determine the US cities where competition is the fiercest.

The study ranked America’s 50 largest metropolitan areas — yes, that includes the booming suburbs of major cities — using three metrics: the size of homebuyers’ average down payment, the share of homebuyers with a credit score of 720 or higher, and the share of homebuyers who shopped around for mortgages before looking for houses.

LendingTree chief economist Tendayi Kapfidze told Insider that researchers chose this criteria because they point to places with a lot of buyers who have strong enough credentials to secure home loans. Offering a big down payment, boasting a top-tier credit score (out of 850), and securing a big loan in advance all give house hunters an edge over their rivals in bidding wars.

Keep reading for a list of the seven American cities with the most competitive housing markets.

Buyer beware.

7. Boston, Massachusetts

Average down payment percentage: 21.11%

Percentage of buyers with a credit score of 720 or higher: 71.68%

Percentage of buyers who shopped around for a mortgage before house-hunting: 59.50%

The median listing price of a home in the Boston metro area was $695,000 in March, up 10.3% compared to the same time last year, according to Realtor.com. In March, the Boston Globe reported that housing inventory in the greater Boston area in February was down 43% compared to the same time last year.

6. Los Angeles, California

Average down payment percentage: 20%

Percentage of buyers with a credit score of 720 or higher: 73.57%

Percentage of buyers who shopped around for a mortgage before house-hunting: 64.44%

The median listing price of a home in the Los Angeles metro was $1.199 million n March, an 24.8% jump from a year ago, according to Realtor.com. The hot spot’s housing market is expected to hold onto its upward momentum over the course of 2021. In February, Southern California’s median sales price hit an all-time high.

Insider’s Stephanie Hallett decided to leave LA because she couldn’t find a home to buy for less than $1 million. She decided instead to relocate to Philadelphia with her husband and dog for more affordable properties.

4T. San Diego, California

Average down payment percentage: 20.41%

Percentage of buyers with a credit score of 720 or higher: 75.19%

Percentage of buyers who shopped around for a mortgage before house-hunting: 62.86%

As of March, the median listing price of a home in the San Diego metro area was $885,000, an increase of 17.9% compared with the same time last year, according to Realtor.com. Buyer demand in the scenic southern California city is expected to hold steady in 2021. In March, active listings in the area were down 26.6% compared to the same time last year.

4T. Portland, Oregon

Average down payment percentage: 20.39%

Percentage of buyers with a credit score of 720 or higher: 74.66%

Percentage of buyers who shopped around for a mortgage before house-hunting: 63.51%

In March, the median listing price of a home in the Portland metro area was $542,000, up 13% from last year. The area is a seller’s market right now, which means there are more people looking to buy than there are homes available. According to Realtor.com, the typical home sat on the market for 26 days in March, down 15% compared to the same time last year.

1. San Jose, California

Average down payment percentage: 22.67%

Percentage of buyers with a credit score of 720 or higher: 84.15%

Percentage of buyers who shopped around for a mortgage before house-hunting: 61.08%

The San Jose metro area is currently a seller’s market, with more buyer demand than there are properties on the market, according to a Realtor.com overview.  The median listing price of a San Jose home was $1.24 million in March, up 0.8% from the year prior.

2. San Francisco, California

Average down payment percentage: 21.43%

Percentage of buyers with a credit score of 720 or higher: 81.96%

Percentage of buyers who shopped around for a mortgage before house-hunting: 62.32%

The median listing price in the San Francisco metro area was $1.05 million in March 2021, which was up 9.4% compared to the same time last year, according to Realtor.com. Homes in the area typically sat on the market for 23 days in March, down 7% from 2020.

 

 

 

3. Raleigh, North Carolina

Average down payment percentage: 21.15%

Percentage of buyers with a credit score of 720 or higher: 70.48%

Percentage of buyers who shopped around for a mortgage before house-hunting: 61.50%

According to Realtor.com, the median listing price in the Raleigh metro area was $420,00 in March, up 12% from the same time in 2020. In February, the typical home for sale sat on the market in the area for 39 days, down 12% from the same time last year.

In October 2020, Insider reported that people from bigger cities were moving to the Raleigh area for lower taxes and a better quality of life.

 

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