Texas named one of the worst states for first-time homebuyers
Here's some depressing news: It seems the states that are attracting the most millennials are also the ones where it's hardest to break into homeownership. Bankrate looked at several different housing and financial factors and determined that Texas is the seventh worst state in the nation for first-time homebuyers.
Measuring each state's housing affordability, job market for young adults, housing market tightness, credit availability, and homeownership among the under-35 crowd, the personal finance website placed the Lone Star State in the bottom half for each metric except job markets. At least we're doing okay there.
We share the distinction of "10 worst" with a lot of places that are known for their major metropolitan areas, such as New York, Massachusetts, and last-place finisher California.
"When you have a state like California where the housing prices are really high and the rental housing is also really expensive, unless you have access to wealth from some source that's not your job, it's going to be really hard for you to amass enough of a down payment, and also the kind of credit that you need to get into the housing market," says Rolf Pendall, co-director of the Metropolitan Housing and Communities Policy Center at the Urban Institute.
He might as well be referencing Texas too, as our surging rents are making it difficult to save for a home. And since we're also in the bottom three for market tightness, the smaller pool of available houses and the bidding wars that often erupt between buyers make it extra tough to snag a home even if you do have that lump sum ready to go.
"Tight market conditions and unaffordably high prices really plague what many young Americans feel are the most desirable places to put down roots," says Bankrate.com analyst Claes Bell in a release. "On the other hand, the availability of FHA loans that allow down payments of as little as 3.5 percent may make it easier to buy a home in high-priced markets than you think."
But if young folks are feeling priced out of home ownership here and on the coasts, where should they head? The Midwest. Iowa, Utah, Minnesota, Kansas, and Missouri are the five most affordable states right now for the under-35 set.