You might want to move if you’re looking to buy your first home.
When it comes to purchasing a home, you’ve heard it’s all about location—but maybe not in the way you think. Sure, you’d want to be in an ideal or up-and-coming neighborhood, but the state you’re house hunting in can make a big difference, too—especially if you’re a first-time home buyer. Personal finance website Bankrate.com just released its rankings for the best and worst states to buy a first home, and it looks like the housing market is tougher than ever for states with large metro areas.
Many millennials are buying homes at slower rates than previous generations because they believe they can’t afford it. But, for the few who are looking to purchase their first homes, they may find better deals in western and Midwestern states—Iowa, Utah, Minnesota, Kansas, and Missouri made the top five in Bankrate.com’s analysis (in that order). Bad news if you want to live in metro areas that millennials often flock to because of growing job prospects: San Francisco, Los Angeles, New York City, Austin, Denver, Portland, and Boston—these cities’ states all rank in the bottom 10.
For the rankings, Bankrate.com looked at five criteria: housing affordability, job market for young adults, housing market tightness, credit availability, and homeownership among the under-35 crowd. It’s no surprise that popular states with large and growing metro areas have tight and expensive housing markets. Add to the fact that it can be difficult in some states for a young person with thin credit history to receive a loan or qualify for a mortgage, plus high unemployment rates, and it might seem impossible for any first-timer to own a home.
All of that may seem bleak, but millennials shouldn’t be completely discouraged. According to Bankrate.com, mortgage rates are historically low, allowing for millennials to afford more expensive first-homes than previous generations. Also, prospective first-time home buyers can take advantage of Federal Housing Administration loans as well.
Take a look at the rankings below and see more at Bankrate.com:
10 Best States for First-Time Home Buyers
- North Dakota
- South Dakota
10 Worst States for First-Time Home Buyers
- New York
- Rhode Island