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

2. Indianapolis, IN

3. Houston, TX

4. Orlando, FL

5. San Antonio, TX

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.