Affordability or jobs? Which factor means more when it comes to first-time homebuyers?
Turns out, it’s both.
Recent data from CoreLogic revealed that first-time buyers made up larger shares of potential homebuyers in affordable markets in the Midwest and Texas, as well as metro areas with high-paying and high-tech job opportunities.
Based on potential first-time homebuyer share, the real estate analytics company ranked the country’s top 100 metros based on their population. The study was based on all purchase mortgage applications from January 2019 to December 2022, whether the applications were accepted or not.
Scranton, Pennsylvania, topped the list at 54%, followed by New Haven, Connecticut, at 52% as the only two metros with more than half of applications coming from first-time buyers. Interestingly, despite its massive home prices, New York City was third (49%), followed by three New England cities that offer less pricey alternatives to Boston and New York: Worcester, Massachusetts (49%); Springfield, Massachusetts (48%); and Hartford, Connecticut (47%).
The Great Lakes area also had several large cities where the first-time homebuyer share exceeded 36%, including Chicago, Detroit, Cincinnati and Columbus, Ohio. Many of these areas offer far greater affordability than cities on either coast. Notably, however, CoreLogic found a correlation between the high-tech employment share and the change in first-time homebuyer share over a three-year period.
San Francisco and San Jose, despite having some of the highest home prices in the nation, saw the highest increases in their first-time buyer shares from 2019 to 2022, likely owing to the abundance and proliferation of high-salary, high-tech job opportunities available in the Bay Area. Austin, Seattle and Boston also saw their first-time buyer shares grow more than the U.S. average during this time frame, and they rank high among metros with larger shares of high-tech employment.
Notably, first-time homebuyers in San Jose, San Francisco and Boston had the highest average credit scores and incomes, and they also contributed the largest downpayments. Again, that’s likely due to higher wages across high-tech industry jobs that attract many first-time buyers.
The lowest percentages of first-time buyers were largely concentrated in metros in Florida and Arizona. North Port, Florida, had the lowest share at 15%, followed by Boise City, Oklahoma (19%); Palm Bay, Florida (23%); Deltona, Florida (23%); Cape Coral, Florida (23%); and Phoenix (24%).
