Seeking deals in more affordable areas

Happy young family with cardboard boxes in new home at moving day concept, excited children running into big modern home
fizkes / Shutterstock

Thanks to rock-bottom mortgage rates, U.S. home sales have surged — and many veterans who go house hunting are encountering “tight inventories (of homes for sale) and the rising cost of housing,” says Veterans United, America’s largest provider of VA loans for homebuyers.

VU says the hot housing market led nearly half (42%) of its borrowers to relocate to more affordable ZIP codes when they bought homes with VA loans last year.

The loans are backed by the U.S. Department of Veterans Affairs, require no money down, and are available for service members, veterans and some surviving spouses. Demand for those mortgages soared 11.4% in 2020, VU says.

The lender doesn’t offer any possible reasons for the surge, but cheap mortgage rates may be one explanation. As the pandemic wrecked the economy, rates hit all-time lows multiple times last year — and 30-year VA loans have been available at 2.25% or less.

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Where veterans are fleeing to cheaper housing

Sunset aerial view of historic downtown Riverside, California.
Matt Gush / Shutterstock
Downtown Riverside, California.

Veterans United says these are the 10 metro areas where homebuyers were most likely to use a VA loan to move somewhere less expensive in 2020:

  1. Riverside, California
  2. New York
  3. Nashville, Tennessee
  4. Seattle
  5. Austin, Texas
  6. Boston
  7. Los Angeles
  8. Minneapolis
  9. Virginia Beach, Virginia
  10. Tampa, Florida

Most military buyers in those markets who relocated found lower-priced housing within the same area, the lender says, though Riverside was an exception: 64% of VA loan users there chose to leave the metro area last year.

Here are the 10 states where homebuying veterans were most likely to move to less expensive ZIP codes last year, according to VU:

  1. Hawaii
  2. California
  3. Massachusetts
  4. Washington
  5. New York
  6. Virginia
  7. Colorado
  8. New Hampshire
  9. Maryland
  10. Utah

The outlook for military homebuyers

Young happy military officer having fun with his wife and dog after coming home from an assignment.
Drazen Zigic / Shutterstock

Service members and veterans who want to buy homes in 2021 are likely to keep focusing on more affordable areas.

The supply of homes for sale continues to decrease, dropping by nearly 40% in December compared to a year earlier, according to Realtor.com. The same data shows listing prices are still rising, typically with double-digit increases every month.

But with mortgage rates now just a tick above historic lows, eager buyers can still score low interest rates and cut their costs. Rates on VA loans are, on average, lower than conventional mortgage rates, thanks to the VA’s guarantee and the reduced risk for lenders.

If you're ready to apply for a VA home loan, find a lender. Check your eligibility with Veterans United Home Loans.

And remember, a VA loan allows you to buy a home with no down payment.

When money is tight, moving to a more affordable ZIP code can be a good first step toward strengthening your finances. But if you’re struggling with debt, consider a debt consolidation loan, which allows you to trade in your high-interest debts for one monthly bill at a more affordable interest rate.

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About the Author

Ethan Rotberg

Ethan Rotberg

Former Reporter

Ethan Rotberg was formerly a staff reporter at MoneyWise. His background includes nearly 15 years as a writer, editor, designer and communications professional. He loves storytelling, from feature writing to narrative podcasts. His work has appeared in the Toronto Star, CPA Canada and Metro, among others.

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