Two California cities top list of most competitive markets

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With fewer available homes on the market, bidding wars are heating up.

Two California cities top LendingTree’s list of 50 most competitive U.S. cities to buy a home — San Jose, followed by its neighbor to the north, San Francisco. The online lending marketplace ranked the 50 most competitive metro areas in the U.S. based on a buyer’s credit score, down payment amount and how much a buyer shopped around for a mortgage.

“It has a lot to do with the amount of supply in the city,” LendingTree’s Chief Economist Tendayi Kapfidze told Yahoo Finance Live. “We know that in San Jose, it’s a very wealthy area so there’s a lot of competition amongst homebuyers because a lot of people have wealth and can afford homes.”

In San Jose, where the average sale price of a home is $1.2 million, buyers had some of the best credit scores in the country. According to LendingTree, 84.15% of buyers in the “Capital of Silicon Valley” had a credit score of 720 or higher. A credit score of 720-850 is considered excellent and usually guarantees buyers get the best rates on credit cards, car loans and home mortgages.

The average down payment in San Jose was 23.67% of sale price, a national high. “In a lot of cities across the country, that number is less than 20%” said Kapfidze. In San Francisco, where the average sale price is $1.4 million, 81.96% of buyers had a credit score of 720 or higher and the average down payment was 21.43%.

Up-and-coming Raleigh, North Carolina, was the third most competitive metro area for homebuyers. With the average home sale price of $340,000, LendingTree found that 70.48% of buyers in Raleigh had a credit score of 720 or higher and the average down payment was 21.15%.