Study Reveals The Best (and Worst) States for First-Time Homebuyers

Study Reveals The Best (and Worst) States for First-Time Homebuyers

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Brittney Morgan
May 2, 2017

If you're looking to buy your first home in Iowa, you're in luck—according to a new study from Bankrate, it's the easiest state for first-time homebuyers, followed closely by Utah and Minnesota.

The toughest states? California, with a score of 13.67 (out of 50, and as compared to Iowa's 40.32), followed by Hawaii and New York. The study scored all 50 states based on 5 factors: housing affordability, housing market tightness, the job market for young adults, credit availability and homeownership among the under-35 crowd. Each state was given a score for each criteria, and those were added up to find the state's total.

Here's the breakdown of each of the BankRate study's criterion and the states that fell at the top and bottom:

Housing Affordability

The study looked at median home sale prices to determine where housing was most affordable. California, which fell in the bottom 3, has both high housing prices and high rental costs, making it a challenge to save up enough money for a down payment, for example.

Most affordable: Iowa, Ohio, West Virginia
Least affordable: Hawaii, California, Oregon

Housing Market Tightness

The study measured both the percentage of homes available for sale or rent in each state, and whether or not homebuilders were meeting demands for new housing there. If homes sell quickly with multiple offers, that's a "tight" market.

Tightest markets: Alaska, Vermont, New Mexico
Least tight markets: Colorado, California, Texas

Job Market for Young Adults

The top states in this category had the lowest unemployment rates in the first-time homebuyer (25-34) demographic, according to Bankrate.

Lowest unemployment rates: North Dakota, South Dakota, Utah
Highest unemployment rates: Alabama, West Virginia, New Mexico

Credit Availability

Looking at the percentage of mortgage applications that got rejected versus those that got accepted, the study concluded that these states are the easiest (and toughest) places to get loans.

Top for credit availability: Alaska, Minnesota, Nebraska
Bottom for credit availability: West Virginia, Mississippi, Louisiana

Homeownership Under 35

Here, the study looked at census data to find the percentage of households under age 35 in owner-occupied housing. The value of this data to the study is simple: Can young people in this state make homeownership happen?

Most millennial homeowners: Minnesota, Iowa, Utah
Least millennial homeowners: Hawaii, California, New York

Buying your first home may be a struggle, especially if you live in or are looking to move to one of the states on the bottom half of the list—and a lot of that is fallout from the recession—but according to Bankrate, it can still be doable. The study noted that mortgage rates are very low by historical standards, meaning that millennials can afford pricier homes than past generations—at least, in terms of affording the cost of the mortgage. Stagnant salaries and exponentially rising home prices tell a different story.

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