Despite interest rates plunging to historic lows during the COVID-19 pandemic, the climate of today’s real estate market has been especially unkind to first-time homebuyers, many of whom have felt the double whammy of sticker shock due to surging prices and discouragement from intense competition.
Researchers from Realtor.com, however, found some areas of the country that may serve as beacons of hope for frustrated first-timers — places where the company claims it’s easier for “typically younger, more cash-strapped buyers to become homeowners in areas they would likely want to live in.” Such markets offer not only greater affordability and stronger for-sale supply, but plentiful jobs, nightlife, recreation and more people in the same age group as well.
“It’s always a challenge to buy your first home and it’s been especially challenging the last couple of years because the housing market has been so competitive,” said Danielle Hale, Realtor.com’s chief economist. “Despite that, there are pockets and neighborhoods across the country where it’s a little easier for first-timers to get their foot in the door — and where they’d want to live, too.”
To compile its list, Realtor.com evaluated cities and towns in the country’s 100 largest metropolitan areas, then further narrowed its choices to one market per state for geographic diversity. With these parameters set, researchers compared list prices to the incomes of 25- to 34-year-olds in the area, measured the number of active listings per 1,000 households, and forecast both home-sales and home-price growth within each metro area.
The best market that Realtor.com found for first-time buyers? Magna, Utah, a township of roughly 27,000 people about 15 miles southwest of Salt Lake City. Although it’s not far from Utah’s popular state capital, more pastoral Magna offers a median home price of only $367,900, more than $100,000 less than Salt Lake City’s median price, per Realtor.com data.
“We’re pricing people out of the more desirable locations and it’s making cities like Magna shine a little more,” said Joel Carson, a Utah-based Realtor, “[especially for] first-time homebuyers, families just starting out, where their price range isn’t allowing them to purchase in other areas.”
Magna was at the front of the top 10 list compiled by Realtor.com, which also included Chalco, Nebraska; Mauldin, South Carolina; Beech Grove, Indiana; Portsmouth, Virginia; Cottage Grove, Wisconsin; Grimes, Iowa; Kuna, Idaho; Ferndale, Michigan; and Maitland, Florida. All but two of these markets are in the Midwest and South regions, where homes are more affordable.
Just three of the towns on Realtor.com’s list — Beech Grove (Indianapolis), Ferndale (Detroit) and Maitland (Orlando) — lie within one of the country’s 35 largest metropolitan areas. And only five — the aforementioned three, plus Magna and Portsmouth (Virginia Beach-Norfolk) — are located within the 50 largest metros. But with lower unemployment rates, faster commute times and many younger residents, all of the markets on this list offer plenty of positives for young house hunters on the lookout for their first homes.
To see more details from Realtor.com’s study, click here.