First-time homebuyers will find the best mix of affordability, low competition, and young homeowners in Midwestern metros, a new report says.
Zillow named the best markets for first-timers in 2024, with St. Louis taking the number one spot. Detroit, Minneapolis, Indianapolis, and Austin rounded out the top five.
These cities offer reasonable prices and a relatively full arsenal of starter homes to choose from. Low-priced properties have been hard to come by due to rate lock-in keeping many families from moving up and a tendency for builders to produce big homes.
That trend is changing, with builders now prioritizing smaller homes with fewer amenities, but until the construction wave is complete, first-time buyers need to prioritize metros that offer affordable options.
“Affording a home is a tough hill to climb, and it’s especially steep for those buying their first home,” said Zillow Senior Economist Orphe Divounguy.
“The increase in new listings this spring, due both to new construction and to more homeowners choosing to sell, will give buyers more options and help to ease price growth. The housing train is slowing down just enough to give more first-time buyers an opportunity to hop on board.”
Zillow also considered factors such as rent prices, competition, and the number of similarly aged households in the area.
St. Louis and Detroit both rank highly for affordability, while Austin is one of the more expensive metros on the list but boasts a young community.
First-time buyers have faced an uphill battle with rates, home prices, and competition soaring since the pandemic. But, thanks in part to rate lock-in anchoring many current homeowners, they made up half of all buyers in 2023, the highest share since at least 2017.
Millennials, the biggest cohort of homebuyers, have faced a tough housing market since they first began aging into their prime purchasing years. Though they face difficult headwinds, they have pushed forward to homeownership as life changes such as marriage and children force them to make due in an unwelcoming market.
In 2023, more than half of all mortgages offered in the country’s 50 largest metros went to Millennials.
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