10 Affordable Metros for First-Time Homebuyers
With mortgage rates and home prices remaining elevated, today’s buyers are facing a challenging market, and these challenges are especially prevalent for first-time homebuyers. Rural areas of the U.S. have always been more affordable for first-time buyers, but for the majority of households looking to buy a home in a more populous metro, entering into homeownership is much more difficult.
To figure out which cities are still affordable for the first-time buyer, financial services company Neighbors Bank analyzed data across major U.S. metros. The analysis ranked cities by their total median housing payments, tax rates, and the average cost of living.
Here’s how the data breaks down for the top three metros for first-time buyers
1. Oklahoma City
Oklahoma City was ranked as the top most affordable city for first-time homebuyers due to its low median home value of just $240,048. With a median annual income of $71,523, housing costs equate to just 28% of the typical buyer’s income. Oklahoma also has the second lowest sales tax among top metros, but its 4.75% marginal income tax rate ranks toward the higher end of the spectrum.
2. Huntington-Ashland, W. Va.-Ky.-Ohio
In the tri-state metro area of Huntington-Ashland, W. Va.-Ky.-Ohio, residents spend an average of just 22% of the median household income—which is $58,993—on housing costs. The metro also had the lowest median home price at just $158,732. Additionally, the property tax rate for the metro sits at just 0.71%.
3. Lubbock, Texas
The Lubbock, Texas metro has an average home price of $202,387, and with median annual incomes at $62,168, the average housing payment accounts for just 27% of the median household income. Additionally, Texas’s lack of a state income tax and its 6.25% sales tax helps to improve affordability.
First-time homebuyers in other parts of the U.S. have much less luck when it comes to entering the housing market
- Average Homebuyer Age Increases While Share of First-Time Buyers Hits New Low: At the end of 2024, the share of first-time homebuyers dropped to a record low of 24%, down from 32% the prior year. Meanwhile, the age of the median first-time buyer reached 38.
- First-Time Homebuyer Affordability Improves Slightly, but Challenges Persist: In Q3 2024, mortgage rates dipped to 6.5% and active listing increased by 16%. However, home prices were unattainable for most households.