If you're a young homebuyer, stay landlocked.
Hawaii is expensive for everyone, especially millennials.
Young people will take longer to come up with a down payment and monthly mortgage dues in Hawaii over every other state, according to GOBankingRates.
The study says that the median list price for a home in Hawaii is about $600,000 and monthly payments are $2,584. Comparatively, the best place for millennials to live is West Virginia, where the median list price is $150,000 and monthly mortgage payments are $704.
Hawaii isn’t the only bad state for millennials. Washington D.C. is the second-worst, where it’ll take a young person nine years to save for a home there. Monthly mortgage payments are $2,378. California, Massachusetts, and Colorado round out the top 5 worst states.
“Texas, Washington, and Colorado are the top three states where millennials are moving, though none top the list of places to buy,” GOBankingRates says. “The three cities losing the most millennials are New York, San Diego, and Miami.”
The high cost of housing isn’t keeping some millennials down. California is still wildly expensive, but the Bay Area is hot for young people to move to, particularly San Francisco and Oakland, even as affordability is nearly impossible.
The study looked at the national median income for millennials ages 25-34, which is about $61,000. A big flaw is the assumption that would-be homebuyers are stashing away 20 percent of their paychecks every month to save for a home.
“We calculated the amount of time it would take to afford a 20 percent down payment based on each state’s median listing price as well as the estimated monthly mortgage payment, based on a 30-year, fixed-rate mortgage,” GOBankingRates says. “We scored each of those two numbers — time to down payment and mortgage payment — to develop our final state affordability ranking.”
West Virginia is best, but there are other places for young people to move to in a fraction of the time it would take in the worst states. The top five best states are:
- West Virginia (Estimated time to save for a down payment: 2.5 years)
- Ohio (2.5 years)
- Arkansas (2.7 years)
- Indiana (2.7 years)
- Iowa (2.8 years)
The top nine states all have median list prices of less than $170,000.
Millennials are still very interested in buying homes, and are looking to boost their credit scores to improve their chances of buying a home they want. Unfortunately, student loan debt and other financial woes are hurting their chances of buying due to lack of savings and poor credit. Right now, most millennials don’t own homes, believing their student loans are to blame.
Even though it’s faster than ever to buy a home, mortgage rates are hurting everyone’s chances at getting an affordable home — not just young people. The demand outweighs the supply, so those who need low-cost homes can’t afford them because cash buyers are scooping them up. Depending on who you ask, we might be in a housing bubble right now, which may or may not be a solid reason as to why the market is red-hot.
Of course, you could just keep renting, which is also getting even more expensive as home prices continue to rise. Even the cheapest apartments for the lowest-income earners are seeing monthly rents rise, pricing out a lot of people from living in affordable places.
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Article last modified on February 23, 2018. Published by Debt.com, LLC . Mobile users may also access the AMP Version: It’ll Take 10 Years for Millennials to Save for a Down Payment in Hawaii - AMP.