First-time homebuyers who have just reached the threshold for a down payment can face steep competition from seasoned homeowners with established equity. And as the cost of living increases, some of these first-time hopefuls could be squeezed out of more expensive areas.
With this in mind, SmartAsset examined the current state of the housing market in 185 metro areas to determine the best places for first-time homebuyers to snag an affordable home. Places were ranked according to several metrics including affordability, competition and social characteristics of each housing market.
Key Findings
- The Lawton, OK metro area has the best housing market for first-time homebuyers. Lawton has the fifth-most affordable housing market, with the median household income ($55,148) making up 44.3% of the median sale price of homes ($131,150). At the same time, 24% of the population is between the ages of 25 and 39, the sixth-highest studywide. Competition for homes is about average, with 22 days until a listing is under contract. The price of homes is only expected to increase by 0.9% over the next year, slightly less than the average projection of 1.6%.
- The Peoria, IL metro area has the most affordable housing market. Relative to the median income of $68,249, the average median sale price of homes at $121,333 is inexpensive. This single metric earned Peoria an overall rank of seventh for best housing markets for first-time buyers.
- The Bloomington, IL metro area has the most competitive housing market. Homes are only on the market for an average of four days before going under contract in the Bloomington metro area, meaning first-time homebuyers need to be ready to pounce. This is partially driven by the particularly low housing inventory relative to the population, paired with the affordability of homes ($197,067) relative to the median household income ($70,674).
- Inventory is highest in these Florida metro areas. Relative to their populations, half of the top 10 cities with the most homes for sale are in Florida, including Cape Coral – which ranked as the second-best metro area for first-time homebuyers – Port St. Lucie, Lakeland, Tampa, and Jacksonville. These metro areas generally have higher than average projected home price growth over the next year, ranging from 2.3% to 3.6%, and on average homebuyers have about a month before a listing goes under contract.
- These California metros have the least affordable housing markets. When adjusting the median home sale price for the median household income in the area, California metros take up six of the top 10 most expensive housing market spots. Incomes range from only 10% to 13% of home prices in Los Angeles (median sale price of $886,667), Santa Maria ($852,250), San Jose ($1,386,667), Salinas ($821,000), Napa ($875,000) and Oxnard ($812,417).
Top 10 Places for First-Time Homebuyers
- Lawton, OK
- Median home sale price: $131,150
- Median household income: $58,076
- Price to income ratio: 44.3%
- Days to pending: 22
- Inventory: 401
- Inventory per capita: 0.0031
- Home price growth forecast in one year: 0.9%
- Percent of population aged 25 to 39: 24.1%
- Cape Coral-Fort Myers, FL
- Median home sale price: $291,667
- Median household income: $74,846
- Price to income ratio: 25.7%
- Days to pending: 43
- Inventory: 16,505
- Inventory per capita: 0.0201
- Home price growth forecast in one year: 2.7%
- Percent of population aged 25 to 39: 16.2%
- Clarksville, TN-KY
- Median home sale price: $268,967
- Median household income: $68,571
- Price to income ratio: 25.5%
- Days to pending: 28
- Inventory: 1,096
- Inventory per capita: 0.0033
- Home price growth forecast in one year: 3.7%
- Percent of population aged 25 to 39: 25.2%
- McAllen-Edinburg-Mission, TX
- Median home sale price: $192,867
- Median household income: $51,751
- Price to income ratio: 26.8%
- Days to pending: 53
- Inventory: 3,213
- Inventory per capita: 0.0036
- Home price growth forecast in one year: 3.9%
- Percent of population aged 25 to 39: 19.5%
- Killeen-Temple, TX
- Median home sale price: $249,538
- Median household income: $66,244
- Price to income ratio: 26.5%
- Days to pending: 36
- Inventory: 2,751
- Inventory per capita: 0.0055
- Home price growth forecast in one year: 2.2%
- Percent of population aged 25 to 39: 23.3%
- Wichita Falls, TX
- Median home sale price: $171,598
- Median household income: $62,402
- Price to income ratio: 36.4%
- Days to pending: 37
- Inventory: 696
- Inventory per capita: 0.0047
- Home price growth forecast in one year: 2.3%
- Percent of population aged 25 to 39: 19.2%
- Peoria, IL
- Median home sale price: $121,333
- Median household income: $71,873
- Price to income ratio: 59.2%
- Days to pending: 13
- Inventory: 874
- Inventory per capita: 0.0022
- Home price growth forecast in one year: 0.5%
- Percent of population aged 25 to 39: 18.2%
- Appleton, WI
- Median home sale price: $268,633
- Median household income: $82,550
- Price to income ratio: 30.7%
- Days to pending: 40
- Inventory: 564
- Inventory per capita: 0.0023
- Home price growth forecast in one year: 2.6%
- Percent of population aged 25 to 39: 20.5%
- Memphis, TN-MS-AR
- Median home sale price: $204,000
- Median household income: $67,407
- Price to income ratio: 33.0%
- Days to pending: 30
- Inventory: 4,509
- Inventory per capita: 0.0034
- Home price growth forecast in one year: 2.4%
- Percent of population aged 25 to 39: 20.6%
- Fayetteville, NC
- Median home sale price: $218,500
- Median household income: $63,650
- Price to income ratio: 29.1%
- Days to pending: 14
- Inventory: 1,495
- Inventory per capita: 0.0028
- Home price growth forecast in one year: 3.9%
- Percent of population aged 25 to 39: 22.7%
Data and Methodology
This study examined 185 metro areas for which data was available. Cities were ranked based on four metrics, composed of:
- Affordability. Median sale price relative to median income.
- Median sale price comes from Zillow (Smooth, All Homes, Monthly) for 2/29/2024.
- Median income comes from the U.S. Census Bureau’s 1 Year ACS. The data is from 2022, adjusted for wage growth of 5.3% through March 2024 per FRED.
- Growth potential.
- Zillow’s Home Value Forecast; All Home Forecast, 1 Year; Homes (SFR, Condo/coop), smoothed. 3/31/2025
- Competition.
- Median days to pending, Zillow. 3/31/2024
- Inventory per capita
- Zillow: For-Sale Inventory, All Homes, Smoothed, Monthly
- U.S. Census Bureau 1 year ACS 2022
- Social.
- Population aged 25-39: US Census Bureau 1 year ACS 2022
Questions about our study? Contact us at press@smartasset.com
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