The 10 Best Cities for First-Time Homebuyers

Mike Brown Updated on May 19, 2019

In recent years, the millennial migration to America’s cities has shown no signs of slowing. From perennial magnets like the Big Apple to smaller urban destinations like Virginia Beach, cities across the country have seen their millennial populations surge.

When they want to settle down in their new homes, however, young Americans often encounter challenging housing markets.

While home prices have consistently climbed nationwide since the depths of the Great Recession, urban centers have seen the sharpest spike, with a 76% price-per-square-foot increase between 2011 and 2016. But despite these rapidly rising prices and significant student loan debt, many millennials are still achieving homeownership. According to the National Association of Realtors, 2017 was the fourth consecutive year in which millennials were the largest group of homebuyers nationwide.

That means that every American city can’t be prohibitively expensive: There are places across the country where first-time homebuyers still have excellent options. In this article, we’ll uncover the top 10 cities in America for buying a first home. To do so, we’ll leverage data from Zillow’s First-Time Homebuyer Index to show where homeownership is still a surprisingly affordable prospect for young Americans.

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Diving into the data

First, let’s unpack the Zillow metrics we’ll use to determine the best cities for first-time homebuyers nationwide. Their latest report identifies five key calculations that indicate opportunities for new homeowners.

  • Median Home Value: Affordable housing markets are attractive for obvious reasons – new buyers won’t be priced out.
  • Home Value Forecast: Getting a home at a low price is great – but seeing its value rise once you buy is even better. The report tracks how much a home’s value is predicted to increase each year, an essential concern for young buyers hoping to build wealth and equity.
  • Housing Inventory: In cities with plenty of homes available, buyers benefit from having an ample number of options. Zillow compares each city’s housing stock to its population to accurately assess availability.
  • Listings With Price Reductions: If sellers are consistently lowering the asking prices for their homes, you can bet it’s a buyer’s market. Zillow tracks the percentage of listings that undergo price reductions before they sell.
  • Buy-Rent Breakeven Horizon: This metric measures how many months it takes for homebuying to make more financial sense than renting in each market. If home prices are relatively low compared to rents, first-time homebuyers have even more incentive to buy. By contrast, in tough markets like Washington, D.C., renting is a better option for any time frame shorter than four and a half years.

With these metrics in mind, we’re ready to uncover the top 10 cities in America for buying a first home.

The 10 Best Cities in America for Buying Your First Home


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No. 1: Memphis, Tennessee

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The Numbers:

  • Median Home Value: $117,600
  • Home Value Forecast: 4.8%
  • Housing Inventory: 4,344
  • Listings With Price Reductions: 12.9%
  • Buy-Rent Breakeven Horizon: 1 year and 2 months

While Nashville has overtaken Memphis as Tennessee’s largest city, the birthplace of rock ’n’ roll has its Eastern neighbor beat when it comes to affordable homes. Boasting plenty of music and a sports culture of its own, Memphis was named a top place for millennials to move to in 2016 because of its reasonable housing market.

Memphis’ good prices don’t stop with real estate, however: The city has low costs of living relative to metro areas of equivalent size. Concerning employment, three Fortune 500 companies call Memphis home, so lucrative corporate jobs are available. But even if you make the average annual salary of roughly $42,000 a year, you can still expect to make ends meet easily.

No. 2: Oklahoma City, Oklahoma

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The Numbers:

  • Median Home Value: $138,600
  • Home Value Forecast: 3.1%
  • Housing Inventory: 7,053
  • Listings With Price Reductions: 17.7%
  • Buy-Rent Breakeven Horizon: 1 year and 10 months

According to Realtor.com, Oklahoma City is a hot spot for young people on the move, with a high number of millennials using their site to search for housing in the city. That could be due, in part, to excellent job prospects – the city’s unemployment rate hovers around just 4%, and big employers like AT&T hire actively in the area.

When they get there, new residents enjoy relatively low costs of living and affordable housing stock. Regarding income, first-time homebuyers have reason to be happy as well: Oklahoma City ranked eighth in the nation for wage growth in a 2016 study.

No. 3: Orlanda, Florida

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The Numbers:

  • Median Home Value: $202,900
  • Home Value Forecast: 3.8%
  • Housing Inventory: 10,344
  • Listings With Price Reductions: 17.4%
  • Buy-Rent Breakeven Horizon: 1 year and 11 months

There’s more to this sprawling city than Disney, and millennials have taken notice: The Orlando area was the third most searched region by millennial house hunters last year. That’s partially because Mickey Mouse isn’t the only big employer in town: JetBlue and Electronic Arts also call Orlando home.

For young families, affordable home prices include a bonus: strong local schools. U.S. News rated Orlando students as significantly more prepared to succeed in college than those in other cities of similar size.

No. 4: Tampa, Florida

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The Numbers:

  • Median Home Value: $183,300
  • Home Value Forecast: 3.2%
  • Housing Inventory: 14,998
  • Listings With Price Reductions: 18.8%
  • Buy-Rent Breakeven Horizon: 1 year and 10 months

Not to be outdone by its nearby neighbor, Tampa boasts even more affordable home prices than Orlando and the highest percentage of price reductions on our list. Taking third place in Realtor.com’s ranking of top millennial destinations, the city offers a diverse array of neighborhoods within its sprawling borders.

While Tampa is home to plenty of big employers, it’s also a top spot for those who want to start businesses of their own. The city ranked second in the country for young entrepreneurs, according to Forbes. Another perk for families – crime rates have been trending in the right direction for years.

No. 5: Jacksonville, Florida

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The Numbers:

  • Median Home Value: $179,100
  • Home Value Forecast: 3.0%
  • Housing Inventory: 7,752
  • Listings With Price Reductions: 15.1%
  • Buy-Rent Breakeven Horizon: 2 years

As the third Florida destination on our list, Jacksonville offers a lot to love – and we mean that quite literally. The largest geographical city in the U.S., Jacksonville has seen its population get bigger in recent years, ranking second among all cities concerning residents gained in 2016. Pair low home prices with a steadily growing job market, and it’s not hard to see why.

The population surge is mostly due to new millennial residents, ranking 17th nationwide in millennial population growth, according to a recent study. Young families will happily note the high quality of the city’s schools.

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No. 6: Rochester, New York

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The Numbers:

  • Median Home Value: $132,000
  • Home Value Forecast: 3.8%
  • Housing Inventory: 2,771
  • Listings With Price Reductions: 12.1%
  • Buy-Rent Breakeven Horizon: 1 year and 4 months

Rochester’s residents are considered to be friendlier than dwellers of a certain city further south in New York. With shockingly low home prices, it seems they have good reason to be. And while traditional manufacturing has largely left the city behind, new sectors like health care and education have filled the void, putting average incomes only slightly lower than the national average.

The city is proud of its new employment culture, especially Wegmans Food Markets, the second-ranked company on Fortune’s 100 Best Places to Work list. But Rochester isn’t all business: Unlike many other cities on this list, local leisure activities include great hiking and water sports in summer and skiing when the snow comes around.

No. 7: Indianapolis, Indiana

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The Numbers:

  • Median Home Value: $137,300
  • Home Value Forecast: 3.0%
  • Housing Inventory: 7,706
  • Listings With Price Reductions: 13.1%
  • Buy-Rent Breakeven Horizon: 1 year and 6 months

If you think reasonable home prices and a great job market can’t be found in one place, Indianapolis might be the exception you’ve been looking for. It ranked in the top 10 for both categories in recent research from Trulia. No wonder Forbes regards it as one of the nation’s best cities for young professionals.

Here’s another reason first-time homebuyers will appreciate Indianapolis: Rents are low enough that they can afford to save for a down payment. A 2017 study found that renters shelled out just 17% of their median household income each month. That means residents have plenty left over to eventually put toward a home.

No. 8: Las Vegas, Nevada

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The Numbers:

  • Median Home Value: $219,200
  • Home Value Forecast: 4.8%
  • Housing Inventory: 13,012
  • Listings With Price Reductions: 12.0%
  • Buy-Rent Breakeven Horizon: 2 years and 1 month

Hit hard by the mortgage crisis of the last decade, Sin City is making a comeback, tying for the highest projected home value growth on this list. That brighter future is due, in part, to Nevada’s booming population growth, with the state ranking second only to Utah in new residents added last year.

While its best-known tourist attractions are geared toward adults, don’t assume that Las Vegas is inhospitable to young families. As a major metropolis, it’s home to plenty of kid-centric institutions, like the Discovery Children’s Museum. Plus, those looking to escape the city can look forward to natural playgrounds within the nearby national parks.

No. 9: Birmingham, Alabama

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The Numbers:

  • Median Home Value: $130,900
  • Home Value Forecast: 2.2%
  • Housing Inventory: 6,065
  • Listings With Price Reductions: 13.4%
  • Buy-Rent Breakeven Horizon: 1 year and 9 months

If the low home prices weren’t enticing enough, Birmingham is economical in many other ways as well. Inexpensive transportation, health care, and groceries were among the reasons Forbes ranked it America’s most affordable city in recent years.

One little-known attraction for young professionals is the city’s thriving publishing scene: Birmingham is where many national magazines like Southern Living are published. For the scientifically or academically inclined, the University of Alabama at Birmingham is the largest employer in the state and was named one of the country’s best midsize employers last year.

No. 10: San Antonio, Texas

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The Numbers:

  • Median Home Value: $158,500
  • Home Value Forecast: 3.0%
  • Housing Inventory: 7,444
  • Listings With Price Reductions: 17.2%
  • Buy-Rent Breakeven Horizon: 1 year and 11 months

Employment in San Antonio can be easily found, with large military and manufacturing presences defining the city’s workforce. In 2017, the city is on track to add 30,000 new jobs. Many of those will continue to come from STEM industries, where San Antonio has grown in employment by 29% since 2000.

Young homebuyers have taken notice, with some attributing the millennial interest to overflow from nearby Austin. That logic makes sense when you consider that Austin’s home values are more than double San Antonio’s by Zillow’s numbers.

Your first home and your future

We hope this ranking of the top American cities for first-time homebuyers encourages you in your homeowning ambitions. Whether you’re a resident of one of these fortunate cities for first-time homebuyers, a new home can be an integral part of establishing financial security for you and your family. As with many financial opportunities, what appears daunting at first can seem entirely possible with a little research. While homeownership is easier to attain in some places than others, a smart saving strategy can put you on track to own a home wherever you reside.

At NITRO, we strive to provide information and insights you need to save for a home and accomplish other financial goals. Our resources walk you through common questions and challenges on topics including credit, debt, and more. With expert advice, you can tackle goals you once thought impossible. Let us help you get there, one smart choice at a time.

Published in: Financial Freedom

About the Author
Mike Brown

Mike is responsible for the editorial and marketing direction of Nitro. He has a history of helping people thru his educational background—first as a teacher at the Pennsylvania State University and then thru 15 years of development and marketing of education programs. Read more by Mike Brown

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