Ranking the Most Attractive Housing Markets for First-Time Buyers

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According to a new Creditnews study, in American history, one of the worst times for first-time homeowners has been over the past few years.

Many younger buyers have been priced out of the housing market by record home prices, persistently low inventory, 22-year-high mortgage rates, and bidding wars with cash- and equity-flush buyers.

First-time homebuyers accounted for just 32% of all deals last year, marking the fourth-lowest percentage in more than 40 years, according to the National Association of Realtors (NAR).

While prospective homeowners wait it out, Creditnews Research examined the 50 biggest metros in the U.S. to find first-time buyer-friendly property markets.

Top 5 Best Metro Areas for First-Time Homebuyers:

      1. Pittsburgh

      1. Austin-Round Rock, Texas

      1. San Antonio-New Braunfels, Texas

      1. Birmingham-Hoover, AL

      1. Jacksonville, FL

    Pittsburgh, home to the Steelers and more than 300,000 residents, is ranked the best U.S. metro to purchase a home for first-time homebuyers.

    Pittsburgh: 

    The “Steel City” is a great destination for first-time homeowners since it provides the finest value for a starting home. In regard to salary, no other metro area in the rankings offers lower mortgage payments. Pittsburgh comes in second place for listing price reductions, which gives prospective homeowners significant negotiating leverage. Per the report, the Pittsburgh metro ranks #1 in mortgage affordability.

    Pittsburgh is ranked 31st for employment growth, meaning its labor market isn’t exactly booming, but it is still adding jobs. The Pittsburgh metro area, which consists of five counties, can be a desirable place to reside in this era of remote work, especially for families without members who work in the region’s manufacturing sector.

    Austin-Round Rock, Texas: 

    Due to the city’s recent population boom, first-time buyers may find it difficult to afford properties at the higher end of the market in these Texas regions. However, there are still good deals to be found for people looking for first houses. With the longest duration of active home listings, the Austin metro area—which spans five counties—ranks first for market accessibility.

    In terms of amenities, culture, and healthcare, Austin is among the most livable cities in America and is among the top ten cities for job growth. Mortgage affordability is the trade-off (29th). Although Austin families earn far more than the national average, the average monthly mortgage payment is still a substantial $2,259 due to the high cost of starter homes—which is an estimated $331,565.

    San Antonio-New Braunfels, Texas: 

    The San Antonio-New Braunfels metro region in the Lone Star State is the third most affordable location for first-time homeowners, located about 80 miles from the state capital. San Antonio has the second-best market access, indicating significantly less homebuyer competition than the national average. Austin is ranked higher in both employment and livability than this location, however it is still in the top10. It does, however, have much greater negotiating power and mortgage affordability than Austin, coming in at number four and sixth among other metro regions.

    Birmingham-Hoover, AL: 

    Birmingham-Hoover is the largest metro area in Alabama—made up of seven counties—and has witnessed an ongoing decline in population over the years, but it still has a lot to offer first-time buyers, ranking sixth for mortgage affordability, fourth for bargaining power, and fifth for employment growth. The region’s labor market is among the fastest-growing in the nation, with employment rising by 3% in the last year.

    Jacksonville, FL: 

    The Jacksonville metro, the fourth-largest metropolitan region in the Sunshine State, spans four counties and rounds out the top 5 in the rankings. Jacksonville has the fourth highest market access in the rankings and the 12th in livability, helping it make the list. Jacksonville’s labor market is a significant differentiator on this list. It leads in job growth, having risen a massive 3.8% in the last year. The main drawbacks to Jacksonville are its middle-of-the-pack rankings for bargaining strength, coming in at 32nd, and mortgage affordability, at 28th in the rankings. Compared to other large metro regions, beginning home prices are extremely reasonable.

    Top 5 Worst Metro Areas for First-Time Homebuyers:

        1. San Jose-Sunnyvale-Santa Clara, CA

        1. San Diego-Carlsbad, CA

        1. Los Angeles-Long Beach-Anaheim, CA

        1. Denver-Aurora-Lakewood, CO

        1. Riverside-San Bernardino-Ontario, CA

      While it may not come as a surprise to many, four of the top five worst metro areas for first-time and potential homebuyers are in the Golden State. While it is well-known for sunny weather and historical landmarks, California is renowned for its expensive home prices and unaffordable housing.

      The San Jose-Sunnyvale-Santa Clara region was ranked the worst place to purchase a home for first-time buyers, which is not surprising for the Golden State.

      San Jose-Sunnyvale-Santa Clara, CA: 

      San Jose, located about an hour south of the famed San Francisco metro, is at the very bottom of Creditnews’ ranking. The reason San Jose is so expensive is that it ranks 50th in terms of mortgage affordability, and starter homes there cost an astounding $965,068—even more than in Los Angeles. exceeds the typical annual household income in the area by more than six times. The remaining factors that may make first-time purchasers want—or need to—avoid them include limited market access, ranked 35th, and weak employment growth, ranked 38th.

      San Diego-Carlsbad, CA: 

      The San Diego metro area, including every part of San Diego County, is comparable to Los Angeles for first-time homebuyers. The city ranks 48th in terms of mortgage affordability, with an average property price of $651,891. Although San Diego is ranked lower than Los Angeles in terms of market access and negotiating strength, it has a considerably higher livability score (26th). First-time buyers generally don’t have many home options, and things aren’t going to get better anytime soon.

      Los Angeles-Long Beach-Anaheim, CA:

      Los Angeles, the most populous metro in America, is among the worst locations for first-time homebuyers, with an average starting property price of $645,196. Another example is the Long Beach–Anaheim area. Mortgage affordability has decreased as a result of rising house expenses; the city is ranked 49th in this area. Los Angeles’s high cost of living, high crime rate, and limited access to healthcare contribute to its low livability ranking of 46th.

      Denver-Aurora-Lakewood, CO:

      When looking for a starter home in this six-county metro area, people in Denver-Aurora-Lakewood—the “Mile-High City” with the lowest bargaining strength—shouldn’t expect price reductions. Due primarily to rising property costs, mortgage affordability is likewise among the lowest, ranked 38th. Denver is one of the few big cities to see negative employment growth, coming in at number 48 on the jobs ranking.

      Riverside-San Bernardino-Ontario, CA: 

      Riverside is a popular vacation spot for Californians due to its close proximity to Los Angeles. The third-largest metro region in California, which spans the counties of Riverside and San Bernardino, is a booming city with plenty of attractions, but because of its high cost of living, it is ranked 48th for livability. Due mostly to rising housing costs, starter house mortgage affordability ranks among the lowest at 44th. Riverside is 39th in the metro area for bargaining power; therefore, its residents have little leverage.

      California dominates the bottom of the rankings because of its lack of mortgage affordability, relatively weak market access, and diminished bargaining power.

      While there are few metro areas where the average household can afford a median-priced home, homeownership is not out of reach. The 2024 market may offer citizens even more hope of achieving the American Dream as we go forward into the new year. As the weather heats up, so will the market…?

      To read the full report, including more data, charts, and methodology, click here.

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      Demetria C. Lester

      Demetria C. Lester is a reporter for MortgagePoint (formerly DS News and MReport) with more than eight years of writing and editing experience. She has served as content coordinator and copy editor for the Los Angeles Daily News and the Orange County Register, in addition to 11 other Southern California publications. A former editor-in-chief at Northlake College and staff writer at her alma mater, the University of Texas at Arlington, she has covered events such as the Byron Nelson and Pac-12 Conferences, progressing into her freelance work with the Dallas Wings and D Magazine. Currently located in Dallas, Texas, Lester is a jazz aficionado, Harry Potter fanatic, and likes to read. She can be reached at demetria.lester@thefivestar.com.
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