According to a recent analysis, among major metro regions, first-time homeowners have the greatest edge over speculators in Denver, where stringent regulations on short-term rentals restrict the upside for speculative buyers. According to a Neighbors Bank survey, first-time buyers made up roughly 69% of all starter-home purchases nationwide last year, while investors purchased 31% of the properties.
First-time homebuyers made up an astounding 84% of starter-home purchases in Denver, where the median listing price was almost $495,000 last month, leaving investors with only 16%. In contrast, investors have a significant advantage in Miami, where the median home price is $499,000. They account for 57% of all starter-home purchases, while first-time purchasers only make up 43%.
According to the article, the reason for this discrepancy is that while Florida state law forbids such restrictions, allowing investors to freely convert residences into holiday rentals, Denver rigorously restricts short-term rentals.
“Affordability doesn’t exist in a vacuum,” says Jake Vehige, President of Mortgage Lending at Neighbors Bank. “Two cities with similar home prices can have completely different outcomes depending on how they regulate investor activity and protect owner-occupants.”
Where First-Time Buyers Are Doing the Best
The latest study excluded cash purchases because it used federal mortgage data from 2024 to calculate first-time buyer share. Starter homes, which are defined as affordable properties on a budget of 30% of the area median income, are the subject of the analysis.
The survey discovered that in addition to Denver, a sizable portion of starter houses in Seattle, Los Angeles, Indianapolis, and Dayton, Ohio, are being purchased by first-time buyers.
Due to restrictions on short-term rentals, which make it challenging for investors to accumulate a sizable portfolio, 81% of starter houses in Seattle, WA, were claimed by first-time buyers. Seattle’s policies restrict big investors and provide first-time buyers more space by allowing each host to have a maximum of two rentals, one of which must be their personal property.
Some 81% of purchases in Los Angeles were made by first-time buyers, and owner-occupants are protected by a mix of state and local legislation.
Los Angeles limits STRs to an owner’s primary house, which discourages investors from turning inexpensive housing into vacation rentals. Additionally, a 45-day opportunity for tenants, NGOs, and owner-occupants to match investor offers on foreclosures is provided under a state legislation. Indianapolis’s affordability played a significant impact in the 78% of starter-home purchases made by first-time homeowners.
Additionally, a number of local initiatives in Indianapolis redirect vacant and abandoned homes away from speculative investors by prioritizing the sale and renovation of properties to owner-occupants.
Additionally, Dayton’s first-time buyer share is a robust 75% thanks to municipal initiatives. With deed restrictions requiring owner-occupancy, one program from the Montgomery County Land Bank assists low-income buyers in purchasing a home.
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