Does Your Market Make the List of Best Cities for First-Time Buyers?

According to the National Association of Realtors, the share of first-time buyers today has decreased about 10% during the last decade. Historically, first-time buyers make up 40% of all U.S. buyers, but the share has dropped to 31% in 2019. Economists say it’s likely due to hurdles such as rising home prices and tight inventory. By comparing 163 of the country’s largest U.S. cities, SmartAsset identified the top markets for first-time buyers. Tennessee and Nevada both have two cities in the top 10 alone: Nashville, Murfreesboro, Tenn., Henderson, Nev., and Reno. None of the top ranking cities have more than 700,000 residents.

1. Nashville, TN

Nashville, Tennessee ranks in the top 10% of cities for three of the four categories that we considered: home market favorability, affordability and employment. Its best ranking is for the employment category, with the 23rd-lowest March 2021 unemployment rate (4.5%) and the 32nd-highest five-year change in median household income (34.42%). In the categories of home market favorability and affordability, Nashville ranks in the top 30 cities for three metrics: five-year home value appreciation (69.70%), housing costs as a percentage of income (22.24%) and average effective property tax rate (0.63%).

2. Boise, ID

Boise, Idaho moved up in this year’s study edition, ranking fourth last year. Boise ranks in the top fourth of cities for all four categories and additionally ranks in the top 15 for four individual metrics. The four top-ranking metrics include its five-year home value appreciation (64.50%), foreclosures per 10,000 homes (0.29), average commute time (less than 19 minutes) and March 2021 unemployment rate (3.5%). Additionally, many other young residents are choosing to settle down and buy homes or apartments in the area. The under-45 homeownership rate is 40.93%, 42nd-highest in our study.

3. Grand Rapids, MI

The home market in Grand Rapids, Michigan is particularly favorable for individuals looking to buy. Grand Rapids has the 21st-best price-to-rent ratio (14.10) and the 40th-highest five-year home value appreciation (more than 53%). Additionally, the state of Michigan has the 18th-lowest foreclosure rate across all 50 states and the District of Columbia, at about 0.37 per 10,000 homes. Grand Rapids also ranks 24th- and 19th-best in our affordability and employment categories, respectively.

4. Omaha, NE

Across all 12 metrics we looked at, Omaha, Nebraska ranks best for its low foreclosure rate and March 2021 unemployment rate. Nebraska has the 10th-lowest foreclosure rate, with 0.32 foreclosures for every 10,000 homes, when compared to all other states and the District of Columbia. Bureau of Labor Statistics (BLS) data additionally shows that the March 2021 unemployment rate of 3.3% in the greater Douglas County was more than five percentage points lower than the national average. Omaha’s under-45 homeownership rate is 43.61%, the 31-highest in our study.

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