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The 10 Top Cities for First-Time Homebuyers, According to Zillow
By Brenden Rearick MONEY RESEARCH COLLECTIVE
While first-time homebuyers anxiously wait for mortgage rates to drop, there are plenty of options for affordable housing markets.
First-time homebuyers are becoming one of the largest segments of the real estate market, making up half of all buyers in 2023. While this demographic continues to grow, though, it is forced to reckon with an expensive housing market that does not necessarily favor them.
When interest rates do eventually come down from their recent record highs, it’s likely to kickstart the long process of getting mortgage rates back to a place where sellers are incentivized to sell and buyers are able to afford homes. But that will all be the end result of a lengthy chain reaction that the Federal Reserve has not yet set into motion.
Fortunately for homebuyers, not all markets are equal. While first-time homebuyers anxiously wait for rates to drop, there are plenty of options for markets that offer a great bang for your buck.
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View RatesReal estate company Zillow recently published its list of the best markets for starter homes. The firm used several metrics to determine these top housing markets, including rent prices, inventory of affordable houses, inventory relative to renting households and density of households aged 29-42.
Here are the 10 markets for first-time homebuyers in 2024, ranked by Zillow in order of their aggregate scores:
- St. Louis, Missouri
- Detroit, Michigan
- Minneapolis, Minnesota
- Indianapolis, Indiana
- Austin, Texas
- Pittsburgh, Pennsylvania
- San Antonio, Texas
- Birmingham, Alabama
- Kansas City, Missouri
- Baltimore, Maryland
In a blog post, Zillow explained that the data points allowed it to rank markets based on how easy it is to navigate the buying process. Markets with low rent, for instance, help buyers save up for a down payment more quickly; the inventory metrics identify markets with a higher number of active, affordable listings and areas with more listings per renter household, providing more options; and the age metric measures the portion of households whose owners fall within Zillow’s “homebuying age” of 29-42. A higher density of younger homeowners would suggest a higher success rate for first-time buyers.
In sum, this means that buyers should theoretically have more buying power in these cities than anywhere else in the country.
It’s worth noting that Zillow’s list focuses on large, urban areas rather than suburbs. In January, Realtor.com published its own list of the best markets for first-time homebuyers; it highlights mostly suburban towns. However, there are similarities between the two, like the inclusion of many Midwestern and Southern markets and a lack of West Coast towns.
More from Money:
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To Afford a Down Payment, Young Homebuyers Often Need ‘a Pot of Family Money’
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Brenden Rearick is a reporter at Money, covering news stories on credit cards, real estate, investing, mortgages and general finance. His work includes writing the most up-to-date breaking news coming out of the world of personal finance, and digging into enterprise stories about finance phenomena like the increasing normalization of debt and affordable housing. Brenden graduated from the University of Pittsburgh with a degree in professional writing and political science in 2020. While there, he contributed to the Pitt News and Pitt Magazine. He also worked as a contributor for Sampsonia Way, the in-house magazine for local non-profit City of Asylum. Shortly after graduating and until he joined Money in the spring of 2023, Brenden worked as a Financial News Reporter at InvestorPlace, covering investing, cryptocurrency and SPACs. Outside of finance journalism, Brenden has over five years of experience freelance reporting and interning for a range of newspapers and websites on topics ranging from politics to local news to sports. His work has appeared in the Pittsburgh Post-Gazette, the Miami Herald, the Charlotte Observer, the Week and NASDAQ.com. He is based in Pittsburgh, Pennsylvania.