Small Town, USA best for first-time buyers
Realtor.com ranked the top spots for younger buyers and found that smaller towns scattered across the Northeast and Midwest hold the most potential.
- The top 10 list included lesser-known cities in the Northeast, Midwest and South, but the West was conspicuously absent.
- Despite obstacles like affordability and low inventory, first-time buyers are optimistic about their ability to own a home.
- While financial considerations were important in the rankings, lifestyle factors were also taken into account.
The West Coast isn't the best coast, according to Realtor.com's list of the best markets for first-time homebuyers in 2024.
The top 10 picks include small to mid-sized towns and cities in the Northeast, South and Midwest, but not a single market in the West made the cut.
So what markets did? The list is dominated by towns that may be largely unknown outside their regions, led by Irondequoit, New York.
The report isn't based only on traditional metrics like affordability and inventory, but on lifestyle factors like entertainment options and youthful demographics.
"While affordability will remain an issue in 2024, a recent Realtor.com survey showed that 95% of prospective first-time homebuyers overwhelmingly feel that they'll be able to afford a home within their lifetime, with 40% saying they'll be able to afford it within the next year," said Danielle Hale, chief economist at Realtor.com.
Still, it won't be easy for most. "Buying a first home can be a daunting task," Hale said. "Couple high interest rates with historically low inventory of homes available for sale in 2023 and hopeful buyers have faced a particularly challenging market."
But those buyers might have an easier time in these top 10 markets:
Irondequoit, New York
Council Bluffs, Iowa
Cheektowaga, New York
Grand Rapids, Michigan
Mattydale, New York
Riviera Beach, Maryland
A balance of affordability and growth
It doesn't matter how great a home is if you can't afford it. This year's top markets for first-time buyers had a median list price of $382,000 last year, 42% below the national average. The report also looked at gross household incomes of 25 to 34 year olds in each market. The towns that made the top ten boasted an average list price to income ratio of 3.1 for that age range, significantly lower than the national ratio of 5.4.
And of course, a home is still an investment — first-time buyers don't want to jump in just to see their values fall. So the top markets are also in metro areas where home price growth in 2024 is expected to exceed 6% on average, well above the national forecast of -1.7%.
The overall top market, Irondequoit, New York, is in the Rochester metro, with a forecasted median price growth rate of 10.4% and a median list price last year of just $187,000.
Commuting still a factor for most
Fully remote work is becoming increasingly rare as employers begin to require at least some in-office days. So commute times are important to homebuyers, and the top 10 cities feature an average expected commute of 24 minutes compared to the national rate of 29 minutes.
The town with the lowest average commute time is Mattydale, New York, where the typical employee can get to and from work in just 20 minutes.
Something to do, and someone to do it with
Cost, investment potential and proximity to work aren't the only considerations: First-time buyers want to live someplace fun. So the report looked at things like restaurants, bars, theaters, shopping and art classes to see which towns have the most to offer.
The cities and towns on the lists have 16.6 of these businesses per 1,000 households, a bit higher than the national average of 15.6. Cheektowaga, New York; Grand Rapids, Michigan; and Newington, Connecticut, have ratios above 19.
And finally, neighbors are an important factor. Assuming first-time buyers are younger and want to be around others in the same age range and life stage, Realtor.com considered the share of homeowners between 25 and 34 in each market. Among the top 10, Riviera Beach, Maryland, is expected to have the largest share of young adult homeowners at 10.9%. As a whole, the towns on the list averaged 8.1% young adult homeowners, considerably higher than 5.4% nationally.