America’s 10 Best (and Worst) Cities for First-Time Homebuyers: Prepare To Be Surprised
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With home affordability at all-time lows, first-time homebuyers face a tough road finding properties that won’t stretch their budget to breaking point. But a new study suggests that they’ll have better luck shopping in certain cities more than others.
Personal finance site WalletHub compiled a list of the best cities for first-time homebuyers—as well as the cities they should avoid—by examining 22 key variables that matter to first-time buyers. They include affordability, number of listings, quality of life (from weather to driver-friendliness), cost of living, real estate taxes, home insurance rates, and crime rates.
The top place for first-time homebuyers is Palm Bay, FL—in fact, the Sunshine State clinched the top five in these rankings. This might come as a surprise to many, given Florida’s soaring insurance rates and extreme weather.
But Realtor.com® senior economist Joel Berner notes that WalletHub’s methodology considers only hail and tornadoes—not hurricanes, flooding, and face-melting heat—to be “extreme weather.”
“Their methodology ignores some risks and overstates some qualities of these markets,” he says.
While not everyone will want to settle in Florida, what’s clear from this list is that searching farther afield is key in today’s market, where only 32% of homebuyers last year were first-timers, compared with the historical average of 40%.
“Buying a home for the first time is a very stressful and difficult process, especially when housing prices are through the roof and interest rates have risen sharply in the past few years,” says Cassandra Happe, an analyst with WalletHub.
What should first-time homebuyers look for?
Characteristics of a city that first-time buyers should take into consideration include neighborhood density, proximity to retail and employment, public school quality, and public safety, says Mike Mei, an assistant professor at Colgate University. He also highly suggests looking at how long your commute will take.
“Many people underestimate the negative effect of long commutes on the quality of life,” he says. “They trade longer commutes for a larger or less expensive home. However, a large amount of economic and health research has shown that long commutes significantly harm health and happiness.”
Here are the 10 best cities for first-time homebuyers, along with why they’re smart places to put down roots.
Palm Bay, FL
Median list price: $349,999
“While it’s a stereotype that millennials struggle to buy homes, Palm Bay has the third-highest millennial homeownership rate,” according to the WalletHub report.
The city has the fourth-highest home appreciation rate in the country, it says. “It leads the country when it comes to active home listings per capita and new building permits per capita, so there are plenty of older and brand-new homes to choose from.”
A search of Palm Bay shows many new housing developments, all at reasonable prices with a median of $200 per square foot.
Realtor.com
Cape Coral, FL
Median list price: $455,000
What makes this canal-threaded city on the west coast of Florida so attractive is that it is far less hurricane-prone than the Atlantic side of the state.
Additionally, the city boasts an extremely high number of active home listings and new building permits per capita, according to WalletHub.
It also leads the country when it comes to real estate agents per capita, helping to smooth the homebuying journey for the first-timer. It has a low crime rate and has the ninth-best school system out of the 300 cities in the country.
Port St. Lucie, FL
Median list price: $445,000
Like the other areas that top the list, Port St. Lucie has a large number of new building permits and active listings. It also has the second-highest millennial homeownership rate in the country, at 64%.
The city has the second-lowest property crime rate and the 12th-lowest violent crime rate in the country. It also ties Cape Coral with the ninth-best school system.
You can expect your investment to appreciate here, too. The area has the 16th-highest home price appreciation in the country, with homes worth 96% more in 2022 than they were in 2016.
With a median list price of $261 per square foot, Port St. Lucie is affordable for first-timers.
Realtor.com
Tampa, FL
Median list price: $475,000
Tampa came in at No. 1 for quality of life, taking into consideration WalletHub’s 22 key indicators. It’s also the largest city on the list, with a population of almost 400,000.
“Tampa offers a ton of outdoor recreational activities for boating, waterskiing, and Jet Skiing, and you have major professional sports teams there that make it exciting,” says local real estate agent Cara Ameer.
It might not be as affordable as the other cities on the list (ranking 177 out of 300), but its cultural attractions, business opportunities, and high number of home listings elevated the city to No. 4 for first-time buyers.
Orlando, FL
Median list price: $399,999
The second-largest city on the list, Orlando is home to more than a dozen theme parks, including (of course) Disney World, Universal Studios, and a Harry Potter–themed park. Children will love its G-rated amusements, and adults have plenty of options, too—including a huge variety of restaurants and nightclubs.
Yet despite these big-city perks, the city ranks fifth for affordability. It also boasts a low crime rate and a high number of active listings that will attract first-time homebuyers.
Surprise, AZ
Median list price: $474,250
A desert community surrounded by mountains, Surprise is known for being the spring training hub of the Kansas City Royals and the Texas Rangers baseball teams. With a population of 155,000, it also fosters a growing arts community and is less than an hour from Phoenix.
Best of all, this city ranks fourth in terms of its real estate market (including new building permits, home appreciation, and active listings).
Realtor.com
Lakeland, FL
Median list price: $350,000
Lakeland is ranked ninth for quality of life and is the third-largest small city on the list. The city will appeal to history buffs: It’s known for its many antiques shops and early 1900s architecture. Several buildings on the Florida Southern College’s campus were designed by Frank Lloyd Wright.
The area also has many lakes (hence its name), including Lake Mirror, famed for the clearness of its waters. The city, just a 45-minute commute to Tampa, is also known for its historical promenade and Hollis Garden.
Boise, ID
Median list price: $569,000
This midsized city is known for its state university and its many trails and parks alongside the Boise River Greenbelt. Residents can hike along Florence’s Trail in Camels Back Park, enjoy historic homes on the North End, or partake of the city’s large winery and brewery scene.
With a median list price of $312 per square foot, Boise might not be as affordable as Florida—but you don’t have to worry so much about hurricanes, either.
Realtor.com
Gilbert, AZ
Median list price: $650,000
Gilbert ranks 27th in real estate market indicators and 32nd in affordability. With a median list price of $293 per square foot and top-ranked schools, Gilbert is attractive to young families.
“A lot of younger buyers are also moving from California to Arizona,” notes Ameer, who is licensed in both California and Florida. “Gilbert is a thriving community south of Phoenix that is great for families and all ages and stages. There’s lots to do in the nearby Phoenix-Scottsdale area with sports, entertainment, restaurants, hiking, golf, and all the beauty that Arizona offers.”
Henderson, NV
Median list price: $562,950
“First-time buyers are leaving California for places like Henderson, NV, where there is no state income tax and you have the vibrance of sports and entertainment in Las Vegas, which is just a short drive away,” says Ameer.
Animal lovers will appreciate the area’s Lion Habitat Ranch, and boaters will enjoy Lake Mead, dotted with many marinas. If ancient history is your jam, the Sloan Canyon National Conservation Area includes a petroglyph site with over 300 ancient rock carvings.
“We have seen tremendous demand from first-time buyers at our Inspirada community in Henderson,” says Aaron Hirschi, president and regional general manager of KB Home. “This market appeals to Las Vegas buyers because it is quiet and provides privacy, while also being affordable to the median income in the area.”
Henderson ranks 20th in real estate market indicators and 36th in affordability with a median list price of $286 per square foot.
Realtor.com
The worst cities for first-time homebuyers
Bringing up the rear are cities that aren’t necessarily bad. (Most of them would come out on top for cultural activities, restaurants, jobs, and just plain excitement.) But they rank low for first-time homebuyers due to a lack of affordability and available homes for sale. They also suffer from quality of life issues, including clogged highways, higher crime, and poorer public school systems.
Ranked from worst to least worst, this list should surprise no one: Hugely unaffordable California takes 8 spots out of 10, with the holdouts being the also highly unaffordable New York City and the very cold Anchorage, AK.
For the record, Kristen Rylander with Douglas Elliman defends the Big Apple: “I am working with several first-time homebuyers, there are many on the hunt but not many properties in New York City to choose from,” she says. “If an apartment is well located, move-in ready, and fairly priced, we are seeing very intense bidding wars with offers going over the asking price.”
10 worst cities for first-time home buyers
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