These Cities Boast the Most Competitive Homebuyers in the U.S.

Online loan marketplace LendingTree has released its study on which cities have the most competitive housing markets. 

LendingTree ranked the 50 largest metropolitan areas in the United States based on an average of the city’s rank in three categories that contribute to the competitiveness of homebuyers in an area:

  • Share of buyers shopping for a mortgage before identifying the house they want
  • Average down payment percentage
  • Percentage of buyers who have good or excellent credit (above 680)

These criteria were chosen because the average American cannot afford to pay cash for a home — this means that most Americans need good credit to secure a loan, and enough cash to be able to make a substantial down payment. A more competitive buyer has higher credit and the ability to put down larger down payments.

Key Findings:

Denver, Los Angeles, and Portland, Ore., have the most competitive buyers in the country. Buyers in these areas have higher than average credit and the ability to put down a larger down payment.

  • Birmingham, Ala., Virginia Beach, Va., and Pittsburgh have the least competitive buyers in the country. Living in a less competitive market can be beneficial for buyers as it means that the path to homeownership is less challenging than it is in other parts of the country. For example, in these three areas, only 43 percent of mortgage shoppers had prime credit, compared to an average of 49 percent across the 50 largest metros in the U.S.
  • The most competitive buyers live out west. Of the top 10 most competitive cities, only two, St. Louis and Boston, were not in a western U.S. state. High-paying tech jobs, common in places like Oregon, San Francisco and Seattle, likely help fuel market competitiveness in some western cities.
  • The average down payment percent in the top 10 most competitive metros is 16 percent, two points higher than the average down payment percent found across all the cities looked at in this study. As the housing market cools, this number may fall somewhat, as sellers and lenders accommodate more potential buyers.
  • Sixty-three percent of buyers in the 10 most competitive metros shopped around for a mortgage before settling on a house. Shopping around for a mortgage can not only help buyers save money — it can also help them become pre-approved for a mortgage, which makes it easier to purchase a home.
  • Fifty-seven percent of buyers in the 10 most competitive metros have good or excellent credit. Across the 50 largest metros in the country, that number is only 49 percent. People who live in more competitive areas should make sure that they carefully monitor and maintain their credit scores.

This should give some idea of what it takes to be a “competitive homebuyer”, from a lender’s perspective.