#United States #Columbia #homebuyers #Housing Policy #Neighbors Bank

Insights on First-Time Homebuyers' Success Against Investors

In a comprehensive analysis by Neighbors Bank, the latest trends in the housing market reveal how local policies can tilt the balance in favor of first-time homebuyers against the increasingly intimidating presence of investors. The research evaluates starter-home purchases across 30 metropolitan areas, illustrating that around 69% of these homes are going to individual buyers, primarily those purchasing for the first time.

The State of the Market

Over the past few years, the market has seen a significant rise in investor purchases; however, the report titled First-Time Buyers Are Holding Their Ground Against Investors highlights that buyer outcomes are often determined by local housing regulations rather than the sheer size of the market. Cities that have created frameworks supportive of owner-occupants tend to exhibit positive outcomes for individual buyers.

The analysis draws comparisons between large cities known for heavy investor activity and smaller or mid-sized regions within the same state, shedding light on markets with less competitive pressures on first-time buyers. The findings suggest that individual homebuyers are thriving, often outpacing investors in a majority of the analyzed locations.

Top Markets for First-Time Buyers

Among the evaluated metropolitan areas, cities like Denver, Seattle, and Los Angeles emerged as favorable options for first-time homebuyers. For instance, in Denver, 84.3% of home purchases were made by first-time buyers, aided by stringent short-term rental regulations that minimize investor competition. Similarly, Seattle boasts an impressive 81.2% capture rate for first-time buyers due to protective tenant laws and limits on rentals.

Los Angeles also supports first-time buyers with legislative frameworks that empower local residents and nonprofits, contributing to an 80.6% share of starter-home purchases for first-time buyers. In Indianapolis and Dayton, local initiatives that prioritize owner-occupancy rights have helped allocate 78.2% and 75.2% of starter-home purchases, respectively, to first-time buyers. Such regulatory environments prove to be pivotal in enhancing housing accessibility for newcomers to the market, suggesting that affordability varies based on local governance rather than market size.

Investor-Heavy Markets

On the flip side, several cities remain hotbeds for investor purchases, limiting opportunities for first-time buyers. Locations like Miami, Atlanta, and Nashville rank highest among investors due to lenient regulations and lucrative returns. For example, Miami has become notorious for houses purchased by investors, with a staggering 56.9% of starter homes bought by them, largely because of state laws that ban local restrictions on short-term rentals. Similarly, Atlanta and Nashville present minimal restraints, allowing investors to acquire significant portions of starter homes.

Cleveland and Oklahoma City also register substantial investor shares, with 45.1% and 41.9% respectively, due to favorable conditions for rental investment.

Conclusion

As outlined by Jake Vehige, president of mortgage lending at Neighbors Bank, the crux of the matter lies in effective regulation. He emphasizes that markets where affordable ownership is protected yield better outcomes for first-time buyers. "First-time buyers can absolutely compete," Vehige states. "But the rules of the market matter. Cities that protect affordable ownership opportunities see stronger first-time buyer outcomes. It’s that plain and simple."

For those looking to buy their first home, understanding local housing policies can provide insights into where they might have the best chances against investors. To delve deeper into this report, access Neighbors Bank's detailed findings at Neighbors Bank's official site.

About Neighbors Bank

Founded in Clarence, Missouri, with offices in Columbia, Neighbors Bank is dedicated to making homeownership affordable. With over $675 million in loans financed in 2024, they stand as the third largest USDA lender nationally, aiming to enhance achievable living for buyers across the nation.