Why this East Bay city has the nation’s worst housing market for first-time buyers

If you’re thinking about finding a starter home in Berkeley,
think again.

The East Bay city is the worst in the nation for first-time
homebuyers, according to an analysis by personal finance website

WalletHub
of affordability, the state of the real estate market
and quality of life done.

Berkeley was the worst among the 300 U.S. cities analyzed, but
it wasn’t the only Bay Area city on the list. Among large cities,
Oakland is the second-worst, followed by San Francisco in fourth
place and San Jose in 12th place. Among medium-sized cities —
those between 150,000 and 300,000 residents — Sunnyvale was the
fifth worst.

But among small cities with fewer than 150,000 residents,
Berkeley was number one, followed by San Mateo in third and Daly
City in sixth.

The region’s exorbitant home prices played a big factor in why
Bay Area cities’ are so concentrated at the bottom of the
rankings for first-time buyers. But price is far from the only
reason.

“Other factors contributing to the poor rankings include a
high average rent-to-price ratio, a low share of homes sold in one
year, long buy vs rent break-even horizons, very few listings with
price cuts, and a low home ownership rate for Millennials,”
WalletHub analyst Jill Gonzalez said in an email.

Berkeley’s worst-in-the-nation showing doesn’t surprise
realtor Deidre Joyner, with Red Oak Realty, who was born in
Berkeley and raised in Oakland.

“I see a lot of people who I grew up with who can’t afford
to own in the cities where they’re from,” Joyner said. “I
think there is a gulf between the haves and have nots.”

Berkeley has many of the qualities young families are looking
for, she said: good public schools, access to transit, quality
grocery stores in walking distance.

“There’s a lot more demand, but not a lot of turnover,”
she said.

Delores
Orr walks on campus at UC Berkeley in Berkeley, Calif., on Friday,
Jan. 19, 2018. (Jose Carlos Fajardo/Bay Area News Group) 

People are staying in their homes longer, so there aren’t many
options available in the market. That’s in part because people
who have outgrown their first homes can’t afford to upgrade to a
bigger space, so they end up remodeling or expanding their
property. That keeps potential starter houses off the market.

Even when something does open up, Deidre said it’s often an
older home with years of deferred maintenance. She said she often
advises first-time buyers to expect $30,000 to $40,000 in
renovations right out of the gate.

So if not Berkeley, where?

Joyner said she’s recently sold some homes in San Leandro,
where homeowners can find some of the same amenities — a BART
station, farmers market, even
public art
— that they want in Oakland or Berkeley but at a
lower price.

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The Alameda County city, which wasn’t included in WalletHub’s
rankings, has a median home value of about $600,000, around
$180,000 lower than the county’s median.

Nationally, Tampa, Florida is the best city for buying a starter
home. And if you want to stay local Concord was the highest-ranked
city in the Bay Area — in 213th place.

Oakland can still be an option for first-time buyers if
they’re willing to look outside the most popular areas.

“There’s 150-some sub-neighborhoods in Oakland,” Joyner
said. “Casting a wider net to see what your options are is a
great way to go about your search.”

Source: FS – All – Real Estate News 1
Why this East Bay city has the nation’s worst housing market for first-time buyers