The real estate market is sending a clear reminder to buyers and sellers: location still matters. This conventional wisdom can be easy to forget. The latest monthly updates describing the nation’s housing situation typically don’t offer a breakdown by city. In reality, some cities are still trying to clean up the mess from the housing bubble, while others are enjoying a clean slate.
If you want to know how your own housing market is performing, there’s no substitute for local information. WalletHub recently analyzed America’s 25 largest metropolitan areas using the 10 key metrics listed below to find the healthiest housing markets. Each metric is weighted, with equity level receiving the highest (2) and accesses to financing receiving the lowest (0.50 each).
- Equity Level: 2
- “Underwater” Mortgages (Less than 0% Equity): 1
- “Precarious” Mortgages (Between 0%-10% Equity): 1
- Down Payment Percentage: 1
- Remaining Time Until Financial Freedom (measures the average number of years needed to pay off a mortgage): 2
- Mortgage Costs (interest rate on first mortgage): 1
- “Easy” Mortgages (measures the percentage of total mortgages obtained with no proof of income, assets or debt): 1
- First-Time Home-Buyer Assistance (measures the percentage of households assisted by state or local government programs on their first mortgage): 1
- Access to Financing – Percentage of Consumers with a Home Equity Line of Credit: 0.5
- Access to Financing – Percentage of Consumers with a Lump-Sum Home Equity Loan: 0.5
Whether you’re looking to buy or already a homeowner, let’s take a closer look at the 10 healthiest housing markets in America.
Houston ranks as the No. 10 healthiest housing market in America. In fact, Texas appears on the list three times. Homeowners in Houston rank quite well in terms of underwater mortgages and current equity. Only 10.7% of homeowners are underwater, and the average equity level is 32%. In comparison, 15.1% of mortgages in the nation are underwater, while the national average equity level is 30%. However, mortgage costs in Houston are higher than other major cities. Nearly 20% of owners put 11% to 20% down on their homes, and 16% put more than 20% down. About 7% made an all-cash purchase.
The City of Brotherly Love is showing some affection for homeowners. Philadelphia ranks as the No. 9 healthiest housing market in America. Like Houston, only 10.7% mortgages are underwater. More homeowners use equity lines of credit and equity loans, but the average equity level is 36%. By comparison, Las Vegas, Jacksonville, and Detroit have equity levels of 12%, 20%, and 21%, respectively. Over half of homeowners put more than 10% down, and 6.4% made an all-cash purchase. Philadelphia is tied for fifth in regard to the medium number of years left until the mortgage is paid off (20 years).
Rochester ranks as the No. 8 healthiest housing market in America. The city ranks best in the nation for underwater mortgages and remaining time until the mortgage is paid off (17 years). Only 6.1% of mortgages are underwater. The average equity level is also impressive at 38%. Almost 44% of homebuyers in Rochester put 10% or less down on their purchases, and mortgage costs run higher than most other major cities. Interestingly, the percentage of first-time homebuyers receiving government financial assistance on their mortgages is the second highest (6.6%) out of the 25 cities analyzed. Orlando is the highest at 6.9%.
7. New York City
The Big Apple is one of the most expensive places to live in the nation, but homeowners are enjoying the No. 7 healthiest market in America. New York City is home to the highest average equity level (47%), one of the best rankings for time until mortgage is paid off, and solid access to financing. Less than 10% of homeowners are underwater on their properties. Over half of homeowners put more than 10% down. Yet New York City has a large amount (19%) of homeowners who obtained their first mortgage with no proof of income, assets, or debt, which is above the national average of 17%.
Austin is the second city in Texas to make the list, but not the last. The city ranks as the No. 6 healthiest housing market in America. Fewer buyers (11.7%) were able to obtain their first mortgage without proof of income, assets, or debt, than the national average. Austin has an average equity level of 33%, and only 7.3% of mortgages are underwater, third best in the analysis. Furthermore, 10% of Austin homeowners made an all-cash purchase. Residents rely the least on first-time home-buyer assistance programs, with only 2.8% of households receiving such help. In comparison, the national average is 4.5%.
Hartford ranks as the No. 5 healthiest housing market in America. Only 7.8% of mortgages are deemed precarious (between 0%-10% equity), while the average equity level is 35%. Hartford is tied for second, behind Rochester, in remaining time until the mortgage is paid off (19 years). Mortgage costs are also below the national average. However, improvement would be welcomed on downpayment amounts. Nearly 38% of buyers don’t put down more than 10%, and only 6.4% pay in all cash. More homeowners use equity lines of credit or equity loans than most other major cities.
4. Northern New Jersey
Northern New Jersey ranks as the No. 4 healthiest housing market in America. The area is tied for third in terms of average equity level (38%), and has the second lowest amount of precarious mortgages (6%). At 20 years, the time remaining until the mortgage is paid off is similar to other major cities, and slightly better than the national average of 21 years. Mortgage costs are better than average. The amount of all-cash purchases (9.2%) is above the national average of 8.7%.
3. San Antonio
Completing the Texan hat trick, San Antonio ranks as the No. 3 healthiest housing market in America. The average equity level is impressive at 36%, while the city is tied for second in regard to number of years remaining to pay off the mortgage (19 years). Mortgage costs are higher here, but less than 1% of homeowners have a home equity line of credit, and only 9.1% of mortgages are underwater. Furthermore, 4.1% of homeowners received help through state or local government programs on their first mortgage.
2. Oklahoma City
Oklahoma City ranks as the No. 2 healthiest housing market in America. Although the average equity level of 32% is nothing to write home about, only 7.3% of mortgages are underwater, and almost 10% of purchases are all cash. Oklahoma is tied for second in regard to time remaining until the mortgage is paid off (19 years). Only 11.4% of homeowners obtained their first mortgage without proof of income, assets, or debt, and few rely on equity lines of credit or equity loans to supplement their lifestyles.
Though one of the pricer markets in America, Boston is the No. 1 healthiest housing market. The average equity level is an impressive 43%, second only to New York City. Boston is also second for the lowest percentage of underwater mortgages (6.7%), and houses the fewest precarious mortgages at only 5.5%. In fact, Boston also has the lowest financing costs compared to the other major cities on the list, and the lowest percentage of homeowners obtaining their first mortgage without proof of income, assets, or debt. Nonetheless, Boston is average in terms of years remaining until the mortgage is paid off (21 years).
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