Top Markets for First-Time Homebuyers

In today’s real estate market, characterized by soaring prices, limited inventory, and high mortgage interest rates, first-time home buyers face significant challenges. This group typically has lower incomes and is younger, often lacking the credit history and savings needed for a sizable down payment.

However, there is encouraging news. A recent study conducted by Realtor.com has identified the top 10 U.S. markets that are most favorable for buyers aged 25 to 34. These rankings are based on various factors such as housing availability, affordability for median-earning households in this age group, job opportunities, unemployment rates, commute times, potential home price growth, and local amenities and cultural offerings.

The study evaluated 2,738 markets within the 100 largest U.S. metro areas, focusing on areas with populations exceeding 5,000. To ensure geographic diversity, only one market per metro area was included in the top 10 list.

Notably, the median home price in each of the top 10 markets falls below the national median of approximately $380,000, with four of them below $200,000. Additionally, inventory levels in six of the 10 markets surpass the national average, providing hopeful signs for prospective buyers.

The recommended markets are predominantly suburbs or satellite cities of major metropolitan areas, offering a balance of job opportunities and cultural amenities from nearby urban centers along with more affordable housing options on the outskirts. Irondequoit, NY, a suburb of Rochester, topped the list as the most promising market for first-time buyers, followed by Benton, AR, near Little Rock, and Winterset, IA, near Des Moines. Other favorable markets include areas near Hartford, CT; Omaha, NE; Buffalo, NY; Oklahoma City, OK; Baltimore, MD; and Syracuse, NY.

Despite historically low levels of mortgage applications and home sales, there is resilience among younger buyers. According to a separate study by LendingTree, 65% of mortgage approvals in 2023 were granted to first-time buyers, underscoring their determination to enter the housing market despite its challenges. While existing homeowners are hesitant to sell and lose their low mortgage rates, first-time buyers are actively seeking opportunities to make their move into homeownership.