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 home-buying 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 size to learn some interesting takeaways—such as the other surprising result that average down payment sizes are all less than 20%.
Here is the list of the top ten cities, with the average amount of the downpayment in parentheses.
- Denver (16%)
- Los Angeles (17%)
- Portland, Oregon (15%)
- San Francisco (17%)
- San Jose, California (19%)
- St. Louis (15%)
- Las Vegas (14%)
- Seattle (19%)
- Sacramento, California (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 20% model, none of the 50 metro areas on the list had an average downpayment size of 20% (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 40 metro areas. It is no longer just about how much you bring to the table, but your buying behavior that will get you ahead of other buyers.
The least competitive markets are Pittsburgh at No. 47, Virginia Beach at No. 48 and Birmingham, Alabama at No. 50. They have downpayment sizes of 13% for Pittsburgh and 12% for Virginia Beach and Birmingham.
Source: Amy Dobson