The best markets for first-time homebuyers are almost all in the South and Midwest
It’s a daunting time to be a first-time homebuyer. Saving for a down payment can take years, and affording monthly payments can be a challenge when mortgage rates are north of 6% — all while taxes, insurance, and maintenance costs are also on the rise.
Still, the dream of homeownership is easier to achieve in some parts of the country than others. While prices and competition are sky-high in places like the Northeast and California, the Southeast and Midwest are comparatively more affordable.
Those dynamics are why Sun Belt cities dominated Zillow’s ranking of best markets for first-time buyers.
In cities like Jacksonville, Fla., the listing giant’s No. 1 choice, average rents sit well below the recommended 30% of median pay, giving aspiring homebuyers room to save for a down payment. Around half of the homes on the market are considered affordable for median households according to similar monthly payment-to-income metrics.
Zillow also considered factors like market competition and, as a proxy for community-building, the share of the population ages 29-43.
Birmingham, Ala., San Antonio, Texas, Atlanta, and Houston round out the top five. Read on for the full list and what it costs to buy a home in these areas.
Median home price: $346,957
With a population of around 1 million, Jacksonville is Florida’s most populous single city. It’s also a relatively affordable option, with home prices in the greater area averaging under $350,000. Jacksonville renters have a shot at saving for a home, as rents average just 23% of median household incomes. Located on the state’s northeast Atlantic coast, the region boasts miles of white sand beaches.
Median home price: $255,600
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The median home in the Birmingham region costs just $256,000, making it the cheapest city on Zillow’s list. Around 56% of homes on the market are considered affordable for median households. Rent burdens are also relatively low, with the median renter spending 21% of their income on rent. The city itself is midsized, with a population of about 195,000, but greater Birmingham has a population of 1.2 million people.
Median home price: $275,829
The south-central Texas city offers colonial flair and relatively affordable home prices, with the median home in the region valued at $276,000. Rents are manageable, coming in at around 20% of median household incomes. Around 47% of home listings in the area are considered affordable for average buyers. Younger homebuyers are also likely to find community, as more than a third of the region’s population is between 29 and 43 years old.
Median home price: $376,108
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Georgia’s capital is a hub for economic activity in the Southeast, but homeownership here remains in reach for many first-time buyers. The median home price in greater Atlanta comes in at well under $400,000, and the median household spends around 22% of its income on rent. Young people seeking mild winters, a manageable cost of living, and a range of job opportunities have flocked to the area, making people ages 29-43 more than 37% of the population.
Median home price: $304,622
Homeownership in the nation’s fourth-largest city can be a reality for many, with the median home in the area going for just over $300,000. Around 40% of homes in the Houston area are considered affordable for people earning the area’s median income, and the typical rent comes in at 22% of median income. For homeowners seeking community, Houston has the most younger people of any city in the top 10, with 29-to-43-year-olds making up nearly 40% of the population.
Median home price: $265,644
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St. Louis embodies the housing bargains available in the Midwest. A median-income household in the city spends less than 20% of its income on rent, easing the road to down payment savings. Those ready to house-hunt usually have options: Some 68% of listings are affordable to the area’s median earners. Greater St. Louis has about 2.8 million people, while the city itself is smaller, at about 300,000.
Median home price: $258,238
If St. Louis isn’t your speed, Detroit is another relatively affordable Midwestern option. Here, the median home costs under $260,000, and rents average under 22% of median incomes. As of February, house hunters with average earnings could afford about 65% of Motor City-area listings.
Median home price: $431,758
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The Raleigh metro area saw some of the largest population growth in the country last year, and its housing affordability likely plays a role. While home prices in the area are slightly higher, at over $430,000, the region’s strong job market — it’s a hub for technology, education, healthcare, and biotechnology — helps keep incomes higher too. The median renter household spends just 18.4% of income on rent, and just under half of Raleigh’s listings were affordable for the median house hunter in February.
Median home price: $394,495
The sole Northeastern entry on the list, Baltimore boasts far better housing affordability than other nearby coastal cities like Washington, D.C., and Philadelphia. Though Baltimore is the largest city in Maryland, homes in the greater metro area come in at under $400,000, and median-income renters spend under 22% of their monthly pay on rent. Affordable listings also abound: Nearly 62% are in reach for average-earning households.
Median home price: $273,855
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Louisville straddles the Southeast and the Midwest, so it’s no surprise that the city is a relative bargain for first-time homebuyers. The median home price hovers below $275,000. Renting eats up an average of 21% of median household incomes, and more than half of listings on the market were considered affordable for those households as of February.
Claire Boston is a senior reporter for Yahoo Finance covering housing, mortgages, and home insurance.
