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Survey: Houston is a Prime Location for First-Time Homebuyers

(By Dale King) HOUSTON – The housing crisis brought on by last decade’s Great Recession has softened, but hasn’t gone away – and certainly isn’t forgotten. Today’s home ownership rate of 64 percent is still slightly anemic compared to the 69 percent of people who called their personal domiciles their own in 2005.

The drop was particularly steep among young, potential homeowners, many of whom are still reluctant to get serious about applying for a mortgage, despite years of record low interest rates. At the end of 2015, fewer than 35 percent of adults under age 35 owned their own homes. Mistrust of market volatility compounded with tighter mortgage lending practices seem to stop would-be buyers from taking that giant step through the door of banks and real estate offices.

A study by SmartAsset has determined the best states for first-time homebuyers to stake out their American dream. It turns out Texas and Oklahoma do very well in that ranking. And the city of Houston – one of seven Lone Star State communities in the survey’s top 20 – finishes highest of the Texas group at Number 5.

Oklahoma City and Tulsa, the Sooner State’s largest cities, took the top two spots in the standings. But with Houston’s fifth place finish, Texas also landed San Antonio in the number 8 slot and neighboring Dallas and Fort Worth were tied for 10th place. Looking deeper into the SmartAsset survey results, Arlington came out number 13, Corpus Christi ranked 17th and Austin finished in the number 20 location.

The analysis, which focused on cities of more than 300,000 population, took into account a variety of variables such as mortgage accessibility, home affordability, the stability of the housing market and the number of quarters since the fourth quarter of 2010 that home prices declined on a year-over-year basis.

The SmartAsset analysis says “Houston has more mortgage lenders approved by the U. S. Department of Housing and Urban Development than any other U.S. city, 186. By contrast, HUD lists just 67 such lenders in New York City, so Houston residents have more options when it comes time to shop for a mortgage. And Houston remains affordable, with an average price per square foot of $87.50.”

While Houston has plenty of mortgage lenders, that’s not necessarily the most important thing for people looking to purchase their first home, said Wayne Murray, president of Weichert Realtors Wayne Murray Properties. “No matter how many lenders there are, you still have to qualify for a loan.”

Amy Bernstein, president of Bernstein Realty in Houston, cites the community’s diversity for its draw. “Houston is such a fantastic city for first-time homebuyers for many reasons. One of the main reasons is there are so many choices in types of housing, price ranges, locations throughout the city and now, compared to previous years, there is increased inventory to choose from.”

“Another major factor,” she said, “is the low interest rates, making mortgage payments for homeowners often more enticing than rental payments, in addition to offering tax-saving benefits.”

The SmartAsset study considers Houston’s house value of $87.50 per square foot to be fairly moderate, well within the $70-to-$90 range of many Top 20 communities. It’s a lot less than Honolulu’s average of $560.17 per square foot, and far, far below the most expensive city in the survey, San Francisco, at $855.75 per square foot.

All seven Texas cities on the list suffered several financial quarters where house values dropped. For Houston, the number was five, the same as Dallas and Corpus Christi. Austin had four, and Fort Worth and Arlington rang up six each.

Certainly, this wasn’t a death knell for home sales. Two other cities in the top 20, Memphis, Tennessee and Charlotte, North Carolina, recorded nine quarters since 2010 when house prices fell. Wichita, Kansas, had 10.

The survey reported the following comments about other Texas cities in the top 20:

  • San Antonio: “The housing market has been booming for the past several years. Prices increased 8 percent from the third quarter of 2014 to the third quarter of 2015. Price growth has consistently been positive since the end of 2011, yet [homes] remain highly affordable, which is the key for first-time homebuyers who are working with a limited budget.”
  • Dallas and Fort Worth: “Both have experienced a high degree of home price appreciation in recent years. Prices in the Dallas metro area increased by 11 percent… In Fort Worth, which is a smaller, but somewhat more affordable market than Dallas, appreciation was 9 percent. If that trend continues, new homeowners will be able to accumulate equity more quickly.”

Other advice from the study: “The most expensive housing markets can be found in clusters on the West Coast and the Northeast. Largely as a result of high prices, zero West Coast cities rank among the top 25 best for first-time homebuyers. The bottom seven cities in SmartAsset’s analysis are all located in California.”

Other cities ranked in the top 20 include Indianapolis, Omaha, Louisville, Colorado Springs, Columbus, Anchorage, Raleigh, Phoenix and Nashville.

April 14, 2016


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