Acquiring a home, synonymous with the American Dream, is a major milestone. Yet, for many, steep home prices and historically high mortgage rates make housing costs unattainable.
According to WalletHub, in 2022, first-time homebuyers accounted for 26% of home purchases, down from the previous year’s 34% due to rising prices.
Kevin J. Boyle, the Willis Blackwood Director at Virginia Polytechnic Institute and State University, noted that homebuying can be emotionally charged, especially for first-timers. He stressed the importance of balancing excitement with a practical approach, considering not just immediate costs but also future upgrades, maintenance, and tax savings.
Here are the top 10 optimal cities for first-time homebuyers:
Palm Bay, FL
Cape Coral, FL
Tampa, FL
Port St. Lucie, FL
Orlando, FL
Surprise, AZ
Gilbert, AZ
Boise, ID
Chesapeake, VA
Henderson, NV
Georgette Chapman Phillips, the Kevin L. and Lisa A. Clayton Dean at Lehigh University’s College of Business suggests avoiding stretching savings for a down payment under 15% (aim for 20%). It’s wiser to opt for a more affordable home or wait to save. She strongly warns against using low downpayment adjustable mortgages to chase a ‘dream house’.
Here are the bottom-ranking 10 cities for first-time homebuyers:
Daly City, CA
Burbank, CA
San Mateo, CA
Oakland, CA
San Francisco, CA
Los Angeles, CA
Santa Barbara, CA
Anchorage, AK
Santa Monica, CA
Berkeley, CA
Speaking from the perspective of an Associate Professor at the University of Texas at Austin’s School of Architecture, Jake Wegmann highlighted that buying a house involves more than the initial expenses. He advised considering utility costs, especially in hotter climates, where summer electricity bills tend to be significantly higher.
Cities with the Best First-Time Homebuyer Affordability
Springfield, IL
Peoria, IL
Montgomery, AL
Detroit, MI
Flint, MI
Cities with the Highest First-Time Homebuyer Cost
Los Angeles, CA
Glendale, CA
Berkeley, CA
Santa Monica, CA
Santa Barbara, CA
Brad Segal, President of Progressive Urban Management Associates and a Lecturer at the University of Colorado Denver, advised aiming for a down payment close to 20% to capitalize on homeownership equity and protect against market volatility impacting home value. For those facing challenges, he suggested 10% as a more feasible minimum.
