A new report by First American Financial Corporation found that the average renter could afford a median-priced home in 30 of the 50 largest markets tracked in Q3 2019—an increase from the prior months’ 24 markets.
Oklahoma City, Oklahoma, was found to be the most friendly market for the average renter or first-time buyers, as they can afford 74% of homes on the market. Louisville, Kentucky, was a close second at 73%, followed by Memphis, Tennessee, at 72%, and Birmingham, Alabama, at 71%.
Other markets found to be most affordable to first-time buyers are Kansas City, Missouri (71%); Pittsburgh, Pennsylvania (70%); Tampa, Florida (69%); Atlanta, Georgia (68%); Indianapolis, Indiana (68%); and St. Louis, Missouri (66%).
First American states that the average renter in Oklahoma City, with a household income of $37,070 has a home-buying power of $230,099. The same renter in Los Angeles, California, would be able to afford less than 2% of the homes for sale in Q3 2019.
The average renter or first-time buyers with a household income of $50,592 and a home-buying power of $314,961, could afford just 6% of homes sold in Los Angeles during the quarter.
The report says lower mortgage rates and rising incomes created “broad-based affordability gains” across the nation.
“The timing for this affordability surge is a boost to the housing market, as more and more millennials decide they want to be homeowners,” First AM said.
While millennials want to enter the housing market, a report by esurance found that 44% of respondents don’t know what to expect for closing costs and 19% expect to pay “nothing.”
Fourteen percent of respondents expect to pay 2-5% of the home price, another 5% expect to pay 5-8% of the home, and 2% of people expect to pay between 8% and more than 11% of the home.
Closing costs typically account for 2-5% of the total home price.
Aside from the monthly mortgage payments, esurance found that homeowners spend $9,400 annually on their home. Again, respondents are unsure of what to expect.