Denver Colorado downtown city skyline at night with clouds overheadGetty
A new study of 1.5 million homebuyers—and their competitive behavior when it comes to buying a house—comes with some slightly surprising results: California is not at the top of the list. Instead it is Denver, Colorado where you have to flex your homebuying muscle the most, according to data from a study by Lending Tree. They looked at the 1.5 million mortgage requests for purchase loans that came through their system in 2018 and ranked the cities based on three main criteria:
- Share of buyers shopping for a mortgage before choosing a house
- Average down payment percentage
- Percentage of buyers who have a credit score above 680
Granted, Lending Tree is not a lender, but an online broker that matches applicants with various lending institutions, but 1.5 million people is still a significant enough to size to learn some interesting takeaways—such as the other surprising result that average downpayment sizes are all less than twenty percent.
Here is the list of the top ten cities, with the average amount of the downpayment in parentheses.
- Denver (16%)
- Los Angeles (17%)
- Portland, Ore (15%)
- San Francisco (17%)
- San Jose, Calif. (19%)
- St. Louis (15%)
- Las Vegas (14%)
- Seattle (19%)
- Sacramento, Calif. (15%)
- Boston (16%)
Of course California still dominates the list, which isn’t too surprising since four cities in the state are also at the top of the list of how much you need to earn to live in each U.S. city. Yet, it is interesting to see Denver climb to the top ahead of all the tech hubs. The median sales price for Denver ranged from $502,000 to over $540,000 during 2018, according to the Denver Metro Association of Realtors. Las Vegas is also somewhat of a surprise since home prices there have finally crossed back over the $300,000 threshold after plummeting to nearly half that during the housing crash after 2008.
Also, in a sign banks have moved even further away from the traditional twenty percent model, none of the fifty metro areas on the list had an average downpayment size of twenty percent (or higher). Only San Francisco and Seattle had down payments as high as 19% and the average for the top ten cities, at 16%, is only two points higher than the average for the remaining forty metro areas. It is no longer just about how much you bring to the table, but about your buying behavior that will get you ahead of other buyers.
The least competitive markets are Pittsburgh at #47, Virginia Beach at #48 and Birmingham, Alabama at #50. They have downpayment sizes of 13% for Pittsburgh and 12% for Virginia Beach and Birmingham. For the full ranking of cities, go to the study here.
Related on Forbes:
How Many Hours You Need To Work In Each U.S. City To Afford A House There
12 Low Down Payment Mortgages, Including Some With Low Or No Mortgage Insurance
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