First-time home buyers aren’t shying away from the competitive housing market, but they are showing a willingness to expand their searches to be more successful. They’re homing in on markets that offer affordability and job opportunities, and that is increasingly leading them past major urban hubs to more rural or secondary cities, according to realtor.com®’s newly released “Best Markets for First-Time Home Buyers” analysis.
First-time buyers hope that they’ll face less competition for a home by expanding their searches beyond major cities.
The Midwest may offer them some of the greatest housing options, according to realtor.com®. Bloomington, Ill., topped realtor.com®’s list as the best market for first-time home buyers, with a median list price of $160,000. All 10 of the markets on realtor.com®’s list have a median home price below the national median price of $370,000.
First-time buyers make up about one-third of this year’s home buyers, according to data from the National Association of REALTORS®. But a shortage of homes for sale and rising home prices are making it more challenging for first-time buyers.
"With 50% fewer homes on the market this year than last, the U.S. housing market is competitive for all buyers,” says Danielle Hale, realtor.com®’s chief economist. “First-time buyers are at a bigger disadvantage since they don't have the funds from a previous home sale to help with their down payment or compete with bidding wars. Our recent survey of potential first-time home buyers confirmed this with 44% indicating they haven't saved enough for a down payment.
“While relocating isn't an option for everyone, the pandemic has caused many to rethink their priorities, including where they want to live,” Hale continued. “This analysis was meant to provide some insight for those who are open to expanding their search as they weigh their homeowner options."
Realtor.com®’s research team identified the top markets for first-time home buyers—the majority who are in the millennial age demographic between ages 25 to 34—by weighing the following six factors: home prices relative to local incomes; the share of 25- to 34-year-olds living in the market; the availability of homes for sale; job opportunities; distance to work; and amenities such as bars and restaurants. To ensure geographic diversity, the rankings were limited to one city per state.
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"Copyright NATIONAL ASSOCIATION OF REALTORS®. Reprinted with permission."