Despite the recent recession, real estate purchases by first time homebuyers are on the rise. According to the National Association of Realtors, 32 percent of home purchases came from first-timers in May 2015, and those numbers will continue to climb. Lawrence Yun, chief economist for NAR said this “encouraging sign” was the result of “strong job gains among young adults, less expensive mortgage insurance and lenders offering low down payment programs.”
To find out where hopeful first time homebuyers will find the most favorable and affordable housing conditions, GoBankingRates, a banking advice site, studied the growth in the number of new homeowners as well as the percentage of foreclosures from 2003 to 2013, state by state.
The top ten best states for first time homebuyers are as follows (drumroll, please!):
7.) Washington D.C.
3.) Rhode Island
2.) New Hampshire
1.) West Virginia
Six of the top ten best states are located in the Northeast, with Arizona as the only Western state that made it into the ranking.
How these states were ranked
In order to land a high ranking, a state had to show significant growth in the number of new home owners, while also maintaining a low rate of foreclosure. GoBankingRates also compared median home values with median rents. In all locations except Washington D.C., mortgage payments for homeowners were lower than monthly rent payments. Washington D.C. also had the highest median housing prices, reserving home purchases for the wealthiest first time buyers. However, D.C. also boasts one of the lowest foreclosure rates at 0.01 percent.
GoBankingRates also examined public assistance programs. Most states offer program for first time homeowners such as low-interest financing, assistance with down payments and closing costs, tax credits, and affordable mortgage insurance. Notable exceptions are Hawaii and Arizona, who offer little in the way of public assistance programs, yet continue to attract a healthy number of first time homeowners.
Let’s hear from some Realuso readers living and working in these high ranking states. What makes your state a great place for a new homeowner?