The long-term worth of your house can be significantly impacted by where you reside. There are good places and bad ones to buy a house in the U.S. As a result, American communities are highly regarded as first-time homebuyers, as well as some that are at the bottom. Either as a personal residence or as an investment, purchasing real estate is a significant financial and time commitment. Therefore, it's important to avoid buying a dud and instead find a prized possession in a prime area.
Although today's homebuyers face challenges due to growing home prices and mortgage rates, the situation is direr for first-time buyers under the age of 35. This situation is exceptionally toxic for first-time homebuyers and harms their psyches. Here are the 20 worst places to buy a home in the U.S. in 2022.
20. Portland, Oregon
Portland was once affordable. But there has been a significant overflow due to the surge in Seattle and S.F. The typical listing price for a property is $469,000. It would take years for rental income to cover the buy-in, based on a median value of $1,848. Portland, by the way, is now in a different time zone from affordable. Due to land constraints, strong demand, and short inventory, Portland is among Oregon's most difficult cities to purchase a home in. Portland, Oregon's typical home price is almost 30% higher than the national average, and prices have climbed by more than 200% since 2000. According to Fool, the city's streets and highways cannot handle the unanticipated demand due to the massive inflow of people flocking to Portland. As a result, traffic is becoming a complete disaster.
19. Las Vegas
Las Vegas was formerly a cheaper option than California, but the city's growing housing prices and red-hot real estate market have made it less appealing to first-time homebuyers. Based on the unemployment rate published by the U.S. Labor Department for March 2022, Las Vegas placed 41st for its job market, followed by a score of 49 for its housing market. In March of 2022, the unemployment rate was 5%. In addition, consumer prices increased 8.3 percent in April compared to the same month last year due to rising housing and rental costs and soaring inflation over the past several months. This makes Las Vegas less desirable for prospective homebuyers and places enormous stress on the city's existing population and rental population.
18. San Francisco, California
The city of San Francisco has a lot of things going for it, one of which is a rising number of available jobs. Unfortunately, the population of this particular region of the Bay Area is barely increasing. That's probably because of the area's sky-high prices. San Francisco's $1.6 million median home value is the highest in the United States. Capitalization rates of 2.5% or less make San Francisco an awful place to invest in rental properties.
17. Riverside, California
Lovely Riverside is home to about 330,000 people. Consider that over 100,000 individuals—or 1/3 of the population—leave the city to find employment. Long commute times are a downside, so Riverside is not considered an ideal place to buy a house. Due to the many people who commute to L.A., Riverside deals with heavy traffic. Riverside may be too much for you if you can't stand the thought of endless miles of concrete and strip malls. In certain places, it exemplifies the worst aspects of urban sprawl. So, in the end, if you want to shop for anything, you'll need a car. Affordability is a problem because incomes are lower than in coastal Southern California.
16. Cincinnati, Ohio
Cincinnati has had demographic and stagnant employment growth, if not shrinking, like many other communities in America's "old Midwest." With a 0.1% population growth, this is not the perfect place for you to decide to become a homebuyer. According to CNBC, the Greater Cincinnati real estate market had an uptick in home purchases at the beginning of 2022. Cincinnati's median sold price is still rising. Even though loan rates are rising, sellers in this robust market continue to benefit from the lack of available inventory.
15. Wichita, Kansas
Even though demographic and employment growth are both terrible, rental yield is quite good. Likely, the principal appreciation is not taking place here. The typical rent in Wichita is $886, so investing in a rental property might not be the way to go. The population growth rate in Wichita is currently at 0.4%, but the employment growth rate is currently at 1.0%, which is better than most localities. The high crime rate in Wichita is another drawback to buying a home there. This may discourage many families from relocating there, reducing demand for homes in the area overall.
14. Chicago, Illinois
In Chicago, real estate prices have been stagnant for the past decade, and this trend is unlikely to change in the foreseeable future. The state is poorly run, and its property taxes are among the highest in the country. It is easy to understand why Chicago is currently considered one of the worst cities in the country in which to buy a property, given the area's negative job rate of growth and the slow stream of new people arriving there. Chicago is also home to many burglars, murders, and petty thieves, and you need a safe place to live when looking to buy a house.
13. Corpus Christi, Texas
Despite its location in the center of the country, Corpus Christi is suffering from a lackluster population growth rate, declining housing values, and falling employment rates year after year. The low population growth of 0.8% is due to very few individuals interested in relocating to the area. Conversely, 3.4% is the rate at which home values are rising.
12. Boston, Massachusetts
The median home price in Boston is $725,000, making the initial investment quite large. The rental yield is only 4.4%, even with a reasonably high median rent of $2,629. It would take about 23 years for the rental income to cover the mortgage payment at that pace. The current prices in Boston are currently at near all-time highs. Boston's real estate market has historically had low "beta," a term used by equities analysts to describe how little price increases or decreases in a given market cycle can be expected. According to Market Watch, the median selling per square foot price in the Seaport is on pace with the highest expensive areas in Manhattan, demonstrating that over the past few years or so, Boston's values have risen closer in line with New York City.
11. Virginia Beach, Virginia
Every single one of the metrics on owning a house in Virginia Beach is bad, with one notable exception: the rental yield. This year, Virginia Beach barely made it onto the list, and the primary reason for this is that there has been no population growth. Because so few people desire to relocate to the neighborhood, it could be challenging to sell a property when the moment arises. With only a 1.6% growth in home values, prices appear to be heading in the opposite direction. There is no doubt that Virginia Beach is one of the worst locations to invest in real estate.
10. Los Angeles, California
Los Angeles is the second biggest city in the United States, although it is widely known for its high housing costs and poor wages. In accordance with the Census Bureau, the median income of families headed by someone aged 25 to 44 in Los Angeles is $80,643, just slightly higher than the median income in Pittsburgh. However, the average cost of a home in this area is around $800,000. The population growth in Los Angeles stands at 1.4%, with employment growth of 1.3%.
9. St. Louis, Missouri
Between 2016 and 2018, St. Louis experienced the most considerable population loss of any U.S. city. Despite the fact that it is a relatively inexpensive city, it is losing population at an alarming rate, and there doesn't appear to be any way to reverse the trend. The violent crime rate is 86.8 percent of the total (22.7 is the U.S. average). The percentage of property crime is 85.1. Growth of the population: 0.23%. According to Real Estate, the living cost in St. Louis is reasonable and is 19% cheaper than the state average and 5% lower than the average for Missouri.
8. Honolulu, Hawaii
Honolulu's market has completely collapsed. Honolulu's economy is struggling due to a decline in tourism and the lack of a lucrative sector. Beautiful scenery and low crime rates describe this island perfectly. Problems arise from sluggish job growth and skyrocketing home prices. Honolulu is a top pick for a retirement destination in the United States, but you should be well-off financially before considering moving. In addition, Honolulu has a shallow annual population growth rate of 0.78.
7. San Jose
There is no point in buying a house where there is a housing problem as the housing costs are high, and demand vastly outstrips supply. The first piece of encouraging news for Silicon Valley residents is that the San Jose metropolitan area pays the highest wages in the entire country. Individuals between the ages of 25 and 44 typically head households with an annual income of more than $150,000. Unfortunately, in the most expensive property market in the country, that won't get you very far.
6. Anchorage, Alaska
Anchorage's yearly snowfall of 79 inches is undoubtedly a selling point for the city, especially among those who enjoy participating in winter sports. You may find it difficult to secure gainful employment after you arrive. According to U.S. Today, the property market is becoming increasingly expensive, and the crime rate is rising while job growth is at a record low. The city's population reduction may be linked to the fact that, despite the city's attractive tax policy, employment growth has been minimal.
5. Rockford, IL
Among major cities, Rockford, Illinois, has the weakest housing market in terms of both growth and stability. There was a 39% possibility that if one bought a house in the Rockford metropolitan region between 1997 and 2021, it would lose at least 5 percent of its value during the first decade after it acquired it. The price of homes has increased by only 67.25 percent over that time, ranking 398th out of 400 analyzed metropolitan regions.
4. Buffalo, New York
According to several indicators, including job growth, Buffalo is doing very well. That being said, the crime rate and the poor population growth are two detrimental issues. The violent crime rate is 56.6, while property crime is 61.4. Buffalo's population is declining, which is a problem. Even though the typical rent is only $898, the rental income is favorable.
3. New Orleans, Louisiana
In regard to employment growth, New Orleans seems to be doing splendidly. The apparent lack of population growth, the crime problem, and the high cost of housing are drawbacks. Buying a house in New Orleans means that you will have to withstand the crime rate in the area, and you never know when you will be a victim. The job growth in New Orleans is at 1.4%, which is pretty impressive. According to Finance Yahoo, there are hurricanes yearly, so New Orleans is not an ideal place to purchase a house.
2. San Diego, California
Real estate taxes are not inexpensive, as any homeowner will attest. The rental yield of 4.4 percent in San Diego is one of the lowest; also, it would take nearly 23 years for the revenue from renting a house to pay off the mortgage. In addition, the city of San Diego is experiencing an increase in inventory. When purchasing a house, it is impossible to make an informed decision based on reading descriptions or browsing internet images, and San Diego is not an ideal place for you due to the high crime rates. You want you and your kids to live in a safe place and not always look over your shoulder.
1. Milwaukee, Wisconsin
There is a 9.3 percent rental yield; however, property growth is hampered by low employment and population numbers. Besides, it's frigid for four months yearly and extremely hot for three months a year. The worryingly high rate of violent crimes has hit Milwaukee hard recently hence people shying away from purchasing a home in Milwaukee. With an employment growth of 0.8%, Milwaukee is not an excellent choice for a new home buyer.
Written by Dana Hanson
Read more posts by Dana Hanson