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Zillow Research

Best Markets for First-Time Homebuyers

It's getting harder to find areas with a healthy balance of affordable home prices, low competition and strong growth prospects -- but our analysis found that these five stand out.

first time home buyer Tampa

As home values continue to climb, it becomes increasingly difficult for first-time buyers to break into a market. More difficult than the monthly payments — which are often more affordable than rent these days — is saving for a down payment.

It’s getting harder to find areas with a healthy balance of affordable home prices, low competition and strong growth prospects — but our analysis found that these five stand out:

1. Tampa, FL

first time home buyer Tampa

Population Growth: 1.9%
Share of Listings With Price Cuts: 18.7%
Zillow Home Value Index: $195,200
Breakeven Horizon: 1 year and 11 months
Zillow Home Value Forecast: 3.1%
Inventory: 13,733 homes

 

2. Indianapolis, IN

first time home buyer Indianapolis

Population Growth: 0.7%
Share of Listings With Price Cuts: 16.4%
Zillow Home Value Index: $143,200
Breakeven Horizon: 1 year and 7 months
Zillow Home Value Forecast: 4.0%
Inventory: 6,476 homes

 

3. Houston, TX

first time home buyer Houston

Population Growth: 1.7%
Share of Listings With Price Cuts: 16.7%
Zillow Home Value Index: $186,800
Breakeven Horizon: 1 year and 10 months
Zillow Home Value Forecast: 2.7%
Inventory: 26,275 homes

 

4. Orlando, FL

first time home buyer orlando

Population Growth: 2.3%
Share of Listings With Price Cuts: 14.9%
Zillow Home Value Index: $216,100
Breakeven Horizon: 1 year and 8 months
Zillow Home Value Forecast: 3.5%
Inventory: 9,351 homes

 

5. San Antonio, TX

first time home buyer san antonio

Population Growth: 2%
Share of Listings With Price Cuts: 18.8%
Zillow Home Value Index: $169,300
Breakeven Horizon: 2 years
Zillow Home Value Forecast: 2.3%
Inventory: 8,036 homes

 

Methodology

To find the best markets for first-time buyers, we weighed five metrics:

  • Median home values, as measured by the January 2018 Zillow Home Value Index: Markets with lower home values score higher because of their relative affordability.
  • The Zillow Home Value Forecast: Markets with stronger forecasted growth in home values from January 2018 to January 2019 score better, as healthy forecasts indicate a good start for buyers looking to grow equity and wealth.
  • The inventory-to-household ratio: Markets with more inventory per household score higher, in an effort to measure available supply for buyers.
  • Share of listings with price cuts: Markets with more listings with at least one price cut are assumed to be somewhat less competitive, taking some of the pressure off first-time buyers.
  • The local buy-rent Breakeven Horizon: Markets with a shorter Breakeven Horizon demonstrate a stronger financial incentive for local residents to buy instead of rent.

These five metrics are ordered, and metros are scored on each feature on a scale from 0 to 10. These five scores are then averaged, and the average is re-scaled to range from 0 to 10. The higher the score, the better a market is judged to be for first-time homebuyers.

Best Markets for First-Time Homebuyers