Top markets for first-time home buyers offer
affordable options and peers living nearby
- St. Louis is the top major
market in the U.S. for first-time home buyers.
- Half of the 10 best markets for first-time buyers are in the
Midwest.
- First-time buyers made up half of all home buyers last year,
the highest share since at least 2017.
SEATTLE, April 4,
2024 /PRNewswire/ -- First-time home buyers in 2023
accounted for the largest share of home purchases in years. A new
Zillow® analysis names this year's best markets for first-time home
buyers, where their dollars go further and starter homes are
relatively plentiful.
First-time buyers made up half of all home buyers last year,
according to Zillow's Consumer Housing Trends Report. That's the
highest share in the report's history, which dates back to 2018,
and up from a low of 37% in 2021. The "rate lock" effect —
occurring when homeowners are financially incentivized to keep
their current home because of the low rate on their current
mortgage — has kept some would-be repeat buyers on the
sidelines.
"Affording a home is a tough hill to climb, and it's especially
steep for those buying their first home. Headwinds like mortgage
rates, low inventory and rising rents are still strong, but
easing," said Zillow Senior Economist Orphe Divounguy. "Attractive
homes are moving fast, so those looking to buy this spring should
get their finances in order now, including getting pre-approved for
a home loan. The increase in new listings this spring, due both to
new construction and to more homeowners choosing to sell, will give
buyers more options and help to ease price growth. The housing
train is slowing down just enough to give more first-time buyers an
opportunity to hop on board."
Top 10 markets for first-time home buyers in
2024
- St. Louis
- Detroit
- Minneapolis
- Indianapolis
- Austin
- Pittsburgh
- San Antonio
- Birmingham
- Kansas City
- Baltimore
Zillow's ranking of the best markets for first-time buyers is
based on rent affordability, the share of for-sale listings a
typical household can comfortably afford, how stiff the competition
is expected to be for those affordable listings, and how many
similar-age households1 live in the area.
The top two markets in Zillow's ranking, St. Louis and Detroit, score well in terms of affordability
— both for rental affordability as a prospective buyer builds up
savings for a down payment, and for the number of affordable homes
available to buy. Austin, while
not the most affordable housing market on this list, ranks first in
the number of similar-age households living there with which a
buyer can build a community.
First-time buyer tips and tricks
Zillow has gathered
tools on one easy-to-navigate web page to help aspiring first-time
buyers make the leap to homeownership, from getting finances in
tip-top shape to hiring the right real estate agent who can help a
buyer win a home.
Zillow's affordability calculator can help buyers
understand their price range, including some of the hidden
costs of homeownership that are often overlooked.
It's important for first-time buyers to understand how their
credit score can impact their loan options and costs. A top
loan officer can help a buyer understand all of their options, such
as whether "paying points" or an adjustable rate mortgage
might make sense for a buyer's specific financial
situation.
Renters who pay their landlords through Zillow can now help
build or enhance their credit history by opting in to rent payment
reporting, with on-time payments reported to a major national
credit bureau.
A down payment is often the biggest financial hurdle for a
first-time buyer. Those without enough money saved for a 20% down
payment shouldn't fret — nearly half of buyers put down less than
20%. Zillow displays down payment assistance programs a buyer may
be eligible for on all for-sale listings.
Metro
Area
|
Rent
Affordability
|
Share of
Affordable Listings
|
Affordable Listings
Per
100 Renters
|
Share of
Similar-Age
Households
|
St. Louis
|
19.9 %
|
66.7 %
|
3.4
|
26.0 %
|
Detroit
|
21.5 %
|
63.6 %
|
4.0
|
24.3 %
|
Minneapolis
|
19.8 %
|
48.4 %
|
2.5
|
28.1 %
|
Indianapolis
|
22.0 %
|
50.4 %
|
2.6
|
28.9 %
|
Austin
|
20.3 %
|
23.0 %
|
1.3
|
33.6 %
|
Pittsburgh
|
21.9 %
|
62.9 %
|
3.7
|
24.4 %
|
San Antonio
|
22.6 %
|
32.8 %
|
2.6
|
30.6 %
|
Birmingham
|
22.4 %
|
47.5 %
|
4.2
|
25.3 %
|
Kansas City
|
21.0 %
|
50.6 %
|
2.2
|
27.2 %
|
Baltimore
|
22.2 %
|
56.4 %
|
2.3
|
27.1 %
|
1 Ages 29–43. Zillow
Research shows nearly half of first-time buyers are in this age
range.
|
Methodology
Zillow's 2024 list of the best markets for
first-time buyers is based on four metrics:
- Rent affordability, as defined by the share of median household
income spent on rent.
- The share of available for-sale inventory on Zillow that the
median household can comfortably afford, spending no more than 30%
of income on the estimated monthly mortgage cost, assuming 5% down
and 6.94% mortgage interest rate.
- The ratio of affordable for-sale inventory to renter
households. More inventory per renter household is an indicator of
less competition for each listing.
- The share of households ages 29–43. More households of similar
age mean a higher score in Zillow's ranking.
About Zillow Group
Zillow Group, Inc.
(Nasdaq: Z and ZG) is reimagining real estate to make home a
reality for more and more people. As the most visited real estate
website in the United States,
Zillow and its affiliates help people find and get the home they
want by connecting them with digital solutions, dedicated partners
and agents, and easier buying, selling, financing and renting
experiences.
Zillow Group's affiliates, subsidiaries and brands include
Zillow®, Zillow Premier Agent®, Zillow Home Loans℠, Trulia®, Out
East®, StreetEasy®, HotPads®, ShowingTime+℠, Spruce® and
Follow Up Boss®.
All marks herein are owned by MFTB Holdco, Inc., a Zillow
affiliate. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS
#10287 (www.nmlsconsumeraccess.org). © 2023 MFTB Holdco, Inc., a
Zillow affiliate.
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