LendingTree® Thursday released the findings of its study on where home buyers will face the fiercest competition to achieve their dream of home ownership in 2018.
LendingTree looked at 1.5 million purchase mortgage loan requests that came through the LendingTree marketplace in the 100 largest cities in 2017. The study ranks cities using three criteria:
- The share of buyers shopping for a mortgage before identifying the house they want. Buyers with financing in place are more appealing to sellers and can compete with cash buyers.
- Average down payment percentage. Having a higher amount of money saved for a down payment can enable you to borrow more money or be offered a lower interest rate, allowing you to make a stronger offer.
- Percentage of buyers who have prime credit (above 680). Borrowers with higher scores have more financing options to make more competitive offers. The cities/markets below are ranked for 2018 using the criteria noted above, including the relative data used to determine the ranking along with the market’s overall rank from the prior year.
Key Findings:
California markets dominate the top 10.
Six of the top 10 most competitive housing markets are in California. San Francisco and San Jose lead the rankings in 2018, with a vast number of credit-worthy and well-heeled borrowers making it one of the most challenging markets for prospective home shoppers.
Some 60%of home shoppers applied for a mortgage before identifying a house. The two cities also came to the table with the highest average down payment of any region, at 19%. Furthermore, nearly two-thirds (64%) of Bay Area shoppers had prime credit scores, above 680.
Tech industries are key.
The strength in the Bay Area may be attributed to the concentration of high-paying technology jobs. This also applies to Seattle, which came in at No. 7, and Portland at No. 9.
Go west. When you get to the water, keep going.
The top 10 are all in western states. If you go further west you get to Honolulu, another top 10 city. The rest of the country comes into play with Boston at No. 11, also a technology hub.
The opposite to being the most competitive is not a bad thing. Here are the most accessible cities:
At the other end of the list are three cities where less than half of home shoppers apply for their mortgage before house hunting; the average home shopper offers a down payment of just 12% and less than 40% of shoppers have prime credit scores. This is great news for buyers in Youngstown, Ohio, McAllen, Texas, and Scranton, Pa., and other accessible cities, which are often in rust belt and southern states, as home ownership is accessible to a larger part of the population.
The most significant of the three variables in home shopping is having financing in place, giving home buyers a leg up on the competition and reducing delays in the process. Buyers with less cash available for a down payment or those with less than perfect credit should start the loan process even earlier to get pre-approved before house hunting. Home buyers across the credit or down payment spectrum should check their credit scores beforehand, know what they can reasonably afford, and shop around for multiple loan offers since interest rates vary between lenders – regardless of whether they are in the hottest, or most accessible housing markets in America.
