- theMReport.com - https://themreport.com -

Affordability Worsening For First-Time Buyers

A new study by NerdWallet [1] found list prices were more than five times the median first-time homebuyers incomes from January to March in 20 of the 50 largest metros.

Also, the number of active listings fell 19% year-over-year from Q1 2019. 

Across the nation, the affordability ratio was 4.5 during Q1 2020—first-time homebuyers could expect to see homes listed at about 4.5 times their income. 

San Francisco has one of the highest average list prices for the quarter ($938,347) but it also has one of the highest median incomes for first-time homebuyers ($131,460).

NerdWallet states just one metro—Pittsburgh—had a quarterly average list price at or below three times the income of first-time homebuyers. Three other metros came in behind Pittsburgh: Buffalo, New York; Cleveland, Ohio; and St. Louis, Missouri, as all list prices were 3.1 times the median income. 

Twenty-eight cities had affordability ratios above the national average (4.5) and 10 had list prices more than six times the local income for potential first-time buyers. 

The Los Angeles-Anaheim-Long Beach metro was found to be the most unaffordable metro in the nation. The average list price for first-time buyers in Los Angeles was $952,656—more than 12 times the average income for a first-time buyer ($77,551). 

San Diego had an affordability ratio of 8.9; San Jose-Sunnyvale-Santa Clara had an affordability ratio of 8, and San Francisco-Oakland-Hayward had an affordability ratio of 7.1.

Also, 39 of the 50 most populated metros across the U.S. saw home prices rise in Q1 2020 by a rate of 4% annually. 

Prices in Houston; Minneapolis; and Louisville, Kentucky, declined the most (4%) over the past year. However, prices rose 10% or more in six areas. Los Angeles saw the biggest gain at 21%. 

The National Association of Realtors (NAR), [2]however, reported first-time buyers were responsible for 36% of sales in April, which is up from 34% in March 2020 and 32% from April 2019. NAR’s 2019 Profile of Home Buyers and Sellers, released in late 2019, found the annual share of first-time buyers was 33% in 2019.