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Ranking Best and Worst Places for First-Time Homebuyers

The 2023 Bankrate Best Metros for First-Time Homebuyers study crunched 10 data points for the nation’s 50 largest metro areas. The report found that Austin, Texas, ranks as the most attractive place for first-time homebuyers, followed by Midwestern and Sun Belt metro areas that offer a combination of affordable homes, strong local economies, and housing markets that aren’t too frothy.

According to the report, the least attractive region is the Washington, D.C., metro area, followed by two metro areas in the Northeast and two in Southern California.

Bankrate ranked 50 metro areas across four broad categories: housing prices in relation to local wages; the tightness of the local housing market; the employment picture; and wellness and culture.

Based on that scoring, the top areas are:

  1. Austin: This metro area’s job market is booming, and it ranks first in that category. Austin also placed second in market tightness and near the top in wellness and culture. It lags in just one area: affordability. With a median home price of $565,000 as of September, according to Redfin, Austin can be a challenging market for young buyers looking for a starter home.
  2. Kansas City: The Kansas City metro area ranked No. 3 in affordability and No. 11 in market tightness. However, its ranking was pulled down by middle-of-the-pack showings in job market and wellness and culture.
  3. Raleigh: Raleigh ranks No. 1 in market tightness, or lack thereof. In this category, Bankrate graded metro areas by how many homes were for sale compared to a year ago, and how quickly those homes sell. In the other three categories, the Research Triangle region (which includes nearby Durham and Chapel Hill) ranked outside the top 10, but still above average.
  4. Minneapolis: The Twin Cities region placed fifth in the labor market category, thanks to a low unemployment rate, strong job growth and short commutes. While it didn’t dominate in any other category, the metro area performed well overall, posting top 20 finishes in wellness and affordability.
  5. Jacksonville: This northern Florida metro area placed in the top 10 in both the job market category and in housing market tightness.

Austin still ‘a boomtown’

In recent years, tech giants like Apple, Amazon, Google and more have set up shop in Austin, already home to the University of Texas and a thriving music scene. Median family income soared to $110,300 in 2022, up 45% from a decade earlier.

The metro area’s prosperity is reflected in rising home prices — they’ve more than doubled over the past decade, outpacing the wage gains. Still, the housing market has turned in favor of buyers over the past year, as illustrated by Austin’s No. 2 ranking in market tightness.

“It's actually is a good time to be a first-time buyer in Austin,” said Ashley Jackson, president of the Austin Board of Realtors and an agent at Realty Austin. “It’s returned to a pre-pandemic normalcy. An FHA or a VA buyer can now have an offer accepted, whereas during the pandemic, it was impossible for those buyers.”

Matt Smith, 35, can attest to that shift in the market. He moved to Austin from New York City in 2019. During the pandemic, he decided he wanted to stay and began shopping for a condo. But he quickly encountered the reality of an intense seller’s market: In one case, his bid was just one of 20 offers on a single unit. “I had no chance,” he recalls.

In 2022, as Austin’s housing market cooled, Smith resumed his search. In November, he closed on a one-bedroom condo in downtown Austin. He put in the only offer on the unit.

Smith lived most of his life in the New York City metro area, but he had grown weary of eye-watering home prices, frigid winters and high taxes. He says he doesn’t mind Texas’ sweltering summers, and he appreciates Austin’s modest property taxes and the lack of a state income tax.

“You just can’t afford anything in the New York City metro area. I was like, ‘I can’t do this anymore,’” he says. “And I’ve had enough snowstorms and polar vortexes.”

He was able to afford Austin homeownership in spite of rising mortgage rates and hefty student loans. “I tell people, ‘If I can do it, you can do it,’” he says.

Worst metro areas for first-time buyers in 2023

At the bottom of the ranking are a group of five metro areas with steep home prices and tight housing markets:

Riverside: California homebuyers who are willing to move inland can get a house for hundreds of thousands of dollars less than they’d spend in a beachside city like San Diego. One trade-off is long commute times, which pulled Riverside down in our rankings. Lower incomes compared to coastal Southern California also make affordability a challenge.

San Diego: San Diego ranked 49th out of 50 in affordability, easily offsetting its No. 4 ranking in wellness and culture.

New York City: The largest metro area in the U.S. had back-of-the-pack showings in Bankrate’s job market and affordability categories. The lone bright spot was a No. 3 showing in wellness and culture.

Boston: Boston came in 46th in affordability, and its rankings in the other three categories were in the middle of the pack.

Washington, D.C.: The nation’s capital ranks 44th in job market, a result of weak job growth and long commutes. In another poor showing, D.C. ranks 39th in market tightness. It's only top 10 finish came in wellness and culture.

To read the full report, including more data, charts and methodology, click here.

About Author: Demetria Lester

Demetria C. Lester is a reporter for DS News and MReport magazines with more than eight years of writing experience. She has served as content coordinator and copy editor for the Los Angeles Daily News and the Orange County Register, in addition to 11 other Southern California publications. A former editor-in-chief at Northlake College and staff writer at her alma mater, the University of Texas at Arlington, she has covered events such as the Byron Nelson and Pac-12 Conferences, progressing into her freelance work with the Dallas Wings and D Magazine. Currently located in Dallas, Texas, Lester is an avid jazz lover and likes to read. She can be reached at [email protected].
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