Best Markets for First-Time Homebuyers
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
| 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
| 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
| 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
| 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
| 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.