Story at a glance
- A new analysis from the financial technology company SmartAsset compared 20 of the largest U.S. cities across five metrics to determine the costliest city for first-year homeowners.
- The analysis found that four of the top five most expensive cities were in California.
- In San Francisco, first-year homeownership costs are $426,997.
The estimated cost for first-year homeowners is highest in San Francisco, where buyers can expect total costs to reach close to $426,000, according to a new analysis.
Home prices soared throughout the pandemic, and although prices are falling slightly, rising mortgage rates have increased monthly costs and continue to push home ownership out of reach for many Americans.
But a new analysis from the financial technology company SmartAsset compared 20 of the largest U.S. cities across five metrics: down payment on the median-valued home, average closing costs, monthly mortgage payment, property taxes and homeowners’ insurance, to determine the costliest city for first-year homeowners.
SmartAsset’s data assumes a 20 percent down payment on the median valued home in a city and a 6 percent mortgage rate for a 30-year fixed mortgage.
The analysis found that four of the top five most expensive cities were in California.
In San Francisco, first-year homeownership costs are $426,997. Here a 20 percent down payment equals more than $316,000, while the average cost of a mortgage hits $91,000.
Conditions are nominally better in San Jose, where total first-year costs for buyers are slightly below $392,000. Down payments for buyers in this Silicon Valley city are $288,955 and mortgage payments over the first year are more than $83,000.
Total first-year costs in Los Angeles and San Diego are estimated at $263,999 and $263,089, respectively. A down payment for a buyer in Los Angeles is significantly lower than in both San Francisco and San Jose, coming in at an estimated $193,199. The estimated down payment in San Diego is $192,376.
Seattle, where first-year buyers’ total costs are estimated at $261,495, rounds out the top five.
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Mortgage rates have risen substantially amid the Federal Reserve’s battle with persistent inflation, leading to a series of major interest rate hikes.
Since March, when the U.S. central bank issued its first interest rate increase, mortgage rates have risen by nearly 3 percentage points. They are currently hovering around 7 percent.
Economists have said that sky-high prices alongside rising mortgage rates make homeownership difficult for first-time buyers, especially in major U.S. cities where prices have experienced double-digit increases.
Here are the 10 U.S. cities where first-year homeownership costs are highest, according to SmartAsset.
1. San Francisco: $426,997
2. San Jose: $391,935
3. Los Angeles: $263,999
4. San Diego: $263,089
5. Seattle: $261,495
6. New York: $231,918
7. Boston: $201,833
8. Austin: $191,611
9. Denver: $173,137
10. Phoenix: $116,403
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