The need for a down payment and the upfront costs of a home remain the biggest hindrances for most prospective house hunters. After rent and other monthly payments get made, there's not always much left over to save.
However, not all metro areas are equal, and in some the median renter can save up enough to become a homeowner in less than five years. With reduced savings times, these cities could be hot markets for mortgage originations.
"Cities that require less time for renters to become homeowners can be particularly good options for the increasing number of millennials looking to purchase property while facing other financial challenges like raising a family or paying off student loans and credit card debt," AJ Smith, vice president of financial education at SmartAsset, said in a statement to NMN. "In the top 10 cities on our list, the average resident can afford the upfront costs of the typical home in about four years or less if they save 40% of their income remaining after paying income taxes and rent."
From Texas to Ohio, here's a look at the top 15 housing markets providing the shortest timelines for renters to buy a home, according to SmartAsset.
For the analysis, SmartAsset weighed five factors in each of the largest 100 U.S. cities: Median income, effective income tax rate, median annual rent, median home value and average closing costs in each city. Data comes from the Census Bureau's 2017 American Community Survey.
The fintech company used the median income, local tax rate and median annual rent to calculate how much income a renter would have left over after paying income taxes and for housing. The study operated under the assumption renters would save 40% of their post-tax and post-rent income annually. Then the timeframes were calculated based on how long it'd take the savings to cover a 20% down payment plus the average closing costs on a median-priced house in each city.
No. 15 Buffalo, N.Y.
Estimated years to homeownership: 4.3 Income after taxes and rent: $14,398 Upfront home costs: $24,759
John Borsa/John - stock.adobe.com
No. 14 Arlington, Texas
Estimated years to homeownership: 4.27 Income after taxes and rent: $21,700 Upfront home costs: $37,101
Dan - stock.adobe.com
No. 13 Indianapolis, Ind.
Estimated years to homeownership: 4.16 Income after taxes and rent: $18,109 Upfront home costs: $30,165
Indianapolis, Indiana, USA skyline over Monument Circle.
SeanPavonePhoto - stock.adobe.com
No. 12 Kansas City, Mo.
Estimated years to homeownership: 4.14 Income after taxes and rent: $20,072 Upfront home costs: $33,232
Kansas City, Missouri.
f11photo - stock.adobe.com
No. 11 Houston, Texas
Estimated years to homeownership: 4.1 Income after taxes and rent: $23,281 Upfront home costs: $38,189
Shane - stock.adobe.com
No. 10 Fort Worth, Texas
Estimated years to homeownership: 4.01 Income after taxes and rent: $23,315 Upfront home costs: $37,421
Cityscape of Fort Worth Texas in early evening light
Leena Robinson/leekris - stock.adobe.com
No. 9 Garland, Texas
Estimated years to homeownership: 4.01 Income after taxes and rent: $22,320 Upfront home costs: $35,815
No. 8 Omaha, Neb.
Estimated years to homeownership: 4 Income after taxes and rent: $21,666 Upfront home costs: $34,630
Skyline of Omaha, Nebraska as seen from the water feature of Gene Leahy Mall
soupstock - stock.adobe.com
No. 7 Cleveland, Ohio
Estimated years to homeownership: 3.99 Income after taxes and rent: $10,931 Upfront home costs: $17,424
CLEVELAND - SEPTEMBER 16: Rock and Roll Hall of Fame and Cleveland, Ohio skyline from the harbor walkway
Paul Brady/pabrady63 - stock.adobe.com
No. 6 Memphis, Tenn.
Estimated years to homeownership: 3.97 Income after taxes and rent: $14,510 Upfront home costs: $23,044
logan - stock.adobe.com
No. 5 Detroit, Mich.
Estimated years to homeownership: 3.86 Income after taxes and rent: $9,334 Upfront home costs: $14,407
lindaparton - stock.adobe.com
No. 4 Fort Wayne, Ind.
Estimated years to homeownership: 3.75 Income after taxes and rent: $17,484 Upfront home costs: $26,214
Aerial view over the downtown city skyline of Fort Wayne Indiana USA
Christopher Boswell/Christopher Boswell - stock.adobe.com
No. 3 Columbus, Ohio
Estimated years to homeownership: 3.67 Income after taxes and rent: $22,953 Upfront home costs: $33,715
Columbus, Ohio beyond The Ohio State University
aceshot - stock.adobe.com
No. 2 Irving, Texas
Estimated years to homeownership: 3.35 Income after taxes and rent: $30,618 Upfront home costs: $41,015
Aerial view apartment buildings complex near canal in Irving, Texas, USA, wintertime.
trongnguyen - stock.adobe.com
No. 1 Toledo, Ohio
Estimated years to homeownership: 3.09 Income after taxes and rent: $15,313 Upfront home costs: $18,908
A panoramic view of downtown Toledo Ohio's skyline from across the Maumee river at a popular restaurant area with a paver brick boardwalk and a decorative iron railing.. A beautiful blue sky with white clouds for a backdrop.
Consumer Financial Protection Bureau Director Rohit Chopra said the FICO credit-scoring model has drawbacks in price, predictiveness and market competition, and stakeholders should develop a more open-sourced model that uses artificial intelligence.
Smaller players face challenges when it comes to mortgage servicing rights, and larger ones have varying motivations, experts at an industry meeting say.
The 30-year fixed rate mortgage average resumed its climb that started in September, as the benchmark 10-year Treasury price still reflects views on inflation.
Fannie Mae's latest economic forecast no longer expects mortgage rates to go below 6% next year, and that is affecting its views on loan origination volume.
Amid steady customer growth, USAA's banking arm failed to make the investments necessary to satisfy either its regulators or some decades-long customers. Changes in the executive suite haven't fixed the problems.
