2015’s Best and Worst Cities for First-Time Home Buyers

by Richie Bernardo

WH-Best-Home-Buyer-Badges-150x150Buying a home for the first time is an exciting and important milestone in the lives of most consumers. That was, at least, until the housing bubble collapsed nearly a decade ago. Today, home buyers are more skeptical than ever in the wake of the financial crisis, especially given the drastic variations in economic recovery across the U.S.

In 2014, the National Association of Realtors® reported that among buyers of primary residences, 33 percent were first-timers, whereas the historical average has been 40 percent for this group. And according to a recent Gallup poll, 41 percent of non-homeowners in 2015 don’t plan to buy a home in the foreseeable future, compared with 31 percent two years ago.

But there are those harboring the opposite sentiment. For consumers whose zeal for home-buying remains strong, WalletHub compared the 300 U.S. cities to determine the attractiveness of their first-time home-buyer markets. We examined our sample using 18 key metrics, ranging from housing costs to real-estate taxes to property crime rates. Our findings, expert commentary and a detailed methodology can be found below.

Main Findings

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Overall Rank

City

“Housing Affordability” Rank

“Real-Estate Market” Rank

“Living Environment” Rank

1 Overland Park, KS 32 25 3
2 Allen, TX 14 31 4
3 Centennial, CO 7 47 9
4 Broken Arrow, OK 5 53 30
5 Frisco, TX 20 32 11
6 Plano, TX 34 33 15
7 Carrollton, TX 34 20 18
8 McKinney, TX 37 30 12
9 Longmont, CO 41 37 1
10 Thornton, CO 30 45 4
11 Grand Prairie, TX 58 15 10
12 Richardson, TX 42 14 22
13 Arvada, CO 23 50 13
14 Norman, OK 15 38 49
15 Colorado Springs, CO 17 77 16
16 Gilbert, AZ 2 94 62
17 Garland, TX 75 26 17
18 Montgomery, AL 12 4 276
19 Westminster, CO 13 79 20
20 Arlington, TX 57 18 34
21 Greeley, CO 64 28 27
22 Austin, TX 146 2 37
23 Denton, TX 143 10 6
24 Irving, TX 119 16 21
25 Virginia Beach, VA 16 127 19
26 Murfreesboro, TN 29 13 199
27 Raleigh, NC 28 58 50
28 Naperville, IL 21 86 28
29 Boca Raton, FL 38 68 39
30 Fort Collins, CO 116 54 2
31 Roswell, GA 40 42 93
32 Oklahoma City, OK 51 27 97
33 Lincoln, NE 47 87 26
34 Chesapeake, VA 8 224 24
35 Omaha, NE 63 36 60
36 Pittsburgh, PA 148 6 67
37 Tulsa, OK 88 19 74
38 Lexington, KY 18 59 118
39 Chandler, AZ 4 184 78
40 Mesquite, TX 74 48 51
41 Louisville, KY 27 21 212
42 Fort Worth, TX 86 52 46
43 Cary, NC 3 150 132
44 Amarillo, TX 193 23 40
45 Aurora, CO 85 70 35
46 Joliet, IL 19 150 42
47 Sterling Heights, MI 22 56 232
48 Cedar Rapids, IA 25 91 111
49 Davenport, IA 71 41 118
50 Boise, ID 49 266 14
51 Peoria, AZ 11 105 148
52 Columbus, OH 94 76 25
53 Cape Coral, FL 81 75 32
54 Houston, TX 277 1 103
55 Nashville, TN 95 24 136
56 Fort Wayne, IN 110 49 85
57 Surprise, AZ 10 142 178
58 El Paso, TX 276 63 8
59 Springfield, IL 26 64 235
60 Charlotte, NC 84 29 177
61 Pembroke Pines, FL 52 139 41
62 Aurora, IL 43 152 57
63 Scottsdale, AZ 39 178 53
64 Lakewood, CO 70 79 94
65 Augusta, GA 66 96 66
66 Des Moines, IA 60 92 105
67 Durham, NC 78 85 88
68 Sandy Springs, GA 100 69 80
69 Livonia, MI 9 112 274
70 Elgin, IL 50 168 47
71 Huntsville, AL 6 99 278
72 Denver, CO 137 108 29
73 Hampton, VA 48 169 54
74 Winston-Salem, NC 111 40 168
75 Corpus Christi, TX 203 11 95
76 Murrieta, CA 118 73 63
77 Savannah, GA 183 9 198
78 Plantation, FL 33 128 196
79 Mission Viejo, CA 59 118 100
80 Elk Grove, CA 62 101 126
81 Tampa, FL 167 104 23
82 Irvine, CA 128 97 56
83 Pueblo, CO 101 88 83
84 Fort Smith, AR 68 16 295
85 Thousand Oaks, CA 126 81 70
86 Madison, WI 175 84 33
87 Birmingham, AL 119 5 277
88 Columbus, GA 31 106 234
89 Charleston, SC 68 57 257
90 Newport News, VA 71 194 44
91 Port St. Lucie, FL 83 100 127
92 Green Bay, WI 105 120 61
93 Dallas, TX 282 3 76
94 Kenosha, WI 108 148 43
95 Temecula, CA 87 109 120
96 Rancho Cucamonga, CA 80 147 98
97 Alexandria, VA 90 180 31
98 Athens-Clarke, GA 205 35 113
99 Bellevue, WA 73 203 48
100 St. Petersburg, FL 82 144 114
101 Wichita, KS 171 133 65
102 Mesa, AZ 46 155 172
103 Fayetteville, NC 24 173 215
104 Henderson, NV 45 276 69
105 Palm Bay, FL 44 162 187
106 Santa Clarita, CA 128 119 89
107 Greensboro, NC 139 62 158
108 Warren, MI 102 34 290
109 Rochester, NY 194 22 200
110 Jacksonville, FL 77 149 143
111 Roseville, CA 91 134 130
112 Coral Springs, FL 135 115 68
113 High Point, NC 79 66 268
114 Toledo, OH 143 137 64
115 Fremont, CA 103 250 45
116 Boulder, CO 226 98 7
117 Clearwater, FL 127 82 176
118 Simi Valley, CA 117 136 99
119 Vacaville, CA 89 177 87
120 Shreveport, LA 112 8 282
121 Memphis, TN 157 55 192
122 Miramar, FL 114 159 90
123 Bakersfield, CA 98 154 138
124 Erie, PA 178 60 163
125 Orange, CA 133 113 130
126 Davie, FL 131 121 123
127 Carlsbad, CA 136 128 108
128 Atlanta, GA 222 51 129
129 Dearborn, MI 67 77 288
130 New Orleans, LA 249 12 188
131 Minneapolis, MN 204 131 52
132 Hillsboro, OR 76 248 86
133 Lakeland, FL 93 132 210
134 St. Paul, MN 154 243 36
135 Huntington Beach, CA 107 184 124
136 Roanoke, VA 161 90 143
137 Peoria, IL 134 107 173
138 Philadelphia, PA 191 83 125
139 Little Rock, AR 92 39 292
140 Spokane Valley, WA 97 258 101
141 Grand Rapids, MI 124 43 267
142 Chula Vista, CA 219 111 59
143 Anchorage, AK 65 237 156
144 Laredo, TX 279 210 37
145 Corona, CA 99 246 84
146 San Antonio, TX 248 165 76
147 Baton Rouge, LA 121 116 208
148 Clovis, CA 60 205 236
149 Sunrise, FL 106 191 157
150 Cincinnati, OH 267 44 107
151 San Diego, CA 166 199 79
152 Portsmouth, VA 109 236 104
153 Norfolk, VA 159 273 73
154 Visalia, CA 56 200 258
155 Mobile, AL 55 88 296
156 Oceanside, CA 229 71 139
157 Phoenix, AZ 113 194 204
158 Allentown, PA 168 145 146
159 Cambridge, MA 1 300 165
160 Kansas City, MO 254 153 102
161 Tuscaloosa, AL 138 46 297
162 Glendale, AZ 122 182 224
163 Richmond, VA 256 65 145
164 Torrance, CA 132 245 115
165 Akron, OH 123 198 209
166 Orlando, FL 183 158 161
167 Reno, NV 182 201 128
168 Cleveland, OH 190 114 213
169 Moreno Valley, CA 159 159 182
170 Yakima, WA 207 175 81
171 Albuquerque, NM 96 274 175
172 Salt Lake City, UT 36 292 182
173 Fontana, CA 147 226 154
174 St. Louis, MO 219 95 189
175 Garden Grove, CA 218 181 75
176 Carson, CA 130 225 214
177 Vancouver, WA 200 256 55
178 Knoxville, TN 176 110 247
179 Waukegan, IL 153 213 151
180 Baltimore, MD 244 102 150
181 Ontario, CA 162 214 160
182 Milwaukee, WI 225 138 155
183 San Jose, CA 214 250 91
184 North Las Vegas, NV 52 290 217
185 North Charleston, SC 124 67 299
186 Oxnard, CA 209 184 134
187 Buffalo, NY 151 235 206
188 Waterbury, CT 150 163 254
189 Yuma, AZ 54 215 293
190 West Covina, CA 181 179 191
191 Burbank, CA 199 207 111
192 Costa Mesa, CA 210 125 218
193 Quincy, MA 230 170 81
194 Spokane, WA 148 265 164
195 Sunnyvale, CA 174 253 110
196 Rockford, IL 141 159 275
197 Seattle, WA 155 286 109
198 Riverside, CA 169 275 137
199 Stamford, CT 223 143 165
200 Tempe, AZ 115 227 264
201 Anaheim, CA 241 174 141
202 Wilmington, NC 173 121 280
203 Santa Rosa, CA 236 209 105
204 Tallahassee, FL 213 117 246
205 San Mateo, CA 142 261 193
206 El Cajon, CA 280 61 152
207 Manchester, NH 163 222 219
208 Las Vegas, NV 104 283 223
209 Lowell, MA 242 124 170
210 Pasadena, CA 164 249 169
211 Dayton, OH 158 176 261
212 Boston, MA 258 172 116
213 Fullerton, CA 192 223 167
214 Ann Arbor, MI 189 140 265
215 Renton, WA 152 280 122
216 Fairfield, CA 165 208 249
217 Tacoma, WA 140 284 159
218 Ventura, CA 208 192 201
219 Santa Clara, CA 170 247 195
220 Concord, CA 195 211 216
221 Worcester, MA 197 232 197
222 Modesto, CA 187 183 259
223 Santa Monica, CA 180 230 245
224 Glendale, CA 263 231 72
225 Escondido, CA 268 103 171
226 Hollywood, FL 221 141 250
227 Los Angeles, CA 272 220 92
228 Sacramento, CA 179 288 149
229 Portland, OR 249 242 139
230 Norwalk, CA 201 264 162
231 Santa Ana, CA 247 268 117
232 Jackson, MS 287 7 283
233 Victorville, CA 177 259 232
234 West Palm Beach, FL 260 74 271
235 Beaverton, OR 186 294 58
236 Rialto, CA 232 196 190
237 Tucson, AZ 227 192 231
238 Honolulu, HI 231 270 121
239 Daly City, CA 172 282 173
240 Fort Lauderdale, FL 239 145 253
241 San Francisco, CA 212 263 206
242 Pompano Beach, FL 211 166 266
243 Kent, WA 202 278 142
244 Springfield, MO 240 217 226
245 Stockton, CA 234 196 239
246 Flint, MI 188 72 300
247 Fresno, CA 237 216 221
248 Washington, DC 145 269 263
249 Federal Way, WA 198 271 181
250 Salem, OR 233 206 238
251 Jersey City, NJ 265 287 71
252 Westminster, CA 257 167 222
253 Chicago, IL 278 202 135
254 Albany, NY 246 157 256
255 Downey, CA 217 260 205
256 Bridgeport, CT 238 156 270
257 Antioch, CA 216 189 273
258 Springfield, MA 235 164 269
259 Brockton, MA 185 281 240
260 Hialeah, FL 290 233 96
261 Gainesville, FL 275 121 225
262 Hayward, CA 215 257 244
263 Indianapolis, IN 206 298 228
264 Palmdale, CA 245 244 179
265 Miami Gardens, FL 224 240 243
266 Detroit, MI 196 187 285
267 Lancaster, CA 255 239 194
268 Long Beach, CA 252 289 153
269 Yonkers, NY 285 204 185
270 Fall River, MA 288 212 211
271 Santa Maria, CA 228 254 271
272 Hartford, CT 274 134 278
273 Gresham, OR 261 238 252
274 Vista, CA 289 130 236
275 Lynn, MA 294 188 240
276 Elizabeth, NJ 286 190 220
277 Vallejo, CA 156 285 289
278 Santa Barbara, CA 251 262 255
279 Chico, CA 264 277 186
280 Pomona, CA 259 272 240
281 Berkeley, CA 253 233 284
282 Newark, NJ 299 171 203
283 New Haven, CT 295 126 286
284 Everett, WA 243 297 201
285 Providence, RI 273 221 281
286 South Gate, CA 293 218 227
287 San Bernardino, CA 269 291 228
288 Lansing, MI 281 93 298
289 El Monte, CA 296 229 147
290 Eugene, OR 283 255 250
291 Inglewood, CA 284 267 230
292 Salinas, CA 266 252 286
293 Paterson, NJ 298 219 182
294 Miami, FL 300 241 180
295 New York, NY 270 299 133
296 Oakland, CA 271 296 261
297 New Bedford, MA 297 279 248
298 Miami Beach, FL 292 228 290
299 Richmond, CA 262 293 294
300 Compton, CA 291 295 260

Best-Cities-for-First-Time-Home-Buyers-Artwork-2

Rankings by City Size

Large City ranking

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Medium-Sized City ranking

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Small City ranking

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Overall Rank

Large Cities

Medium-Sized Cities

Small Cities

1 Colorado Springs, CO Overland Park, KS Allen, TX
2 Arlington, TX Plano, TX Centennial, CO
3 Austin, TX Grand Prairie, TX Broken Arrow, OK
4 Virginia Beach, VA Gilbert, AZ Frisco, TX
5 Raleigh, NC Garland, TX Carrollton, TX
6 Oklahoma City, OK Montgomery, AL McKinney, TX
7 Omaha, NE Irving, TX Longmont, CO
8 Pittsburgh, PA Lincoln, NE Thornton, CO
9 Tulsa, OK Chesapeake, VA Richardson, TX
10 Lexington, KY Chandler, AZ Arvada, CO
11 Louisville, KY Amarillo, TX Norman, OK
12 Fort Worth, TX Boise, ID Westminster, CO
13 Aurora, CO Peoria, AZ Greeley, CO
14 Columbus, OH Cape Coral, FL Denton, TX
15 Houston, TX Fort Wayne, IN Murfreesboro, TN
16 Nashville, TN Pembroke Pines, FL Naperville, IL
17 El Paso, TX Aurora, IL Boca Raton, FL
18 Charlotte, NC Scottsdale, AZ Fort Collins, CO
19 Denver, CO Augusta, GA Roswell, GA
20 Corpus Christi, TX Des Moines, IA Mesquite, TX
21 Tampa, FL Durham, NC Cary, NC
22 Dallas, TX Huntsville, AL Joliet, IL
23 Wichita, KS Winston-Salem, NC Sterling Heights, MI
24 Mesa, AZ Elk Grove, CA Cedar Rapids, IA
25 Jacksonville, FL Irvine, CA Davenport, IA
26 Memphis, TN Madison, WI Surprise, AZ
27 Bakersfield, CA Birmingham, AL Springfield, IL
28 Atlanta, GA Columbus, GA Lakewood, CO
29 New Orleans, LA Newport News, VA Sandy Springs, GA
30 Minneapolis, MN Port St. Lucie, FL Livonia, MI
31 Philadelphia, PA Rancho Cucamonga, CA Elgin, IL
32 San Antonio, TX St. Petersburg, FL Hampton, VA
33 San Diego, CA Fayetteville, NC Murrieta, CA
34 Phoenix, AZ Henderson, NV Savannah, GA
35 Kansas City, MO Santa Clarita, CA Plantation, FL
36 Cleveland, OH Greensboro, NC Mission Viejo, CA
37 Albuquerque, NM Rochester, NY Pueblo, CO
38 St. Louis, MO Toledo, OH Fort Smith, AR
39 Baltimore, MD Fremont, CA Thousand Oaks, CA
40 Milwaukee, WI Shreveport, LA Charleston, SC
41 San Jose, CA St. Paul, MN Green Bay, WI
42 Seattle, WA Huntington Beach, CA Kenosha, WI
43 Riverside, CA Little Rock, AR Temecula, CA
44 Anaheim, CA Grand Rapids, MI Alexandria, VA
45 Las Vegas, NV Chula Vista, CA Athens-Clarke, GA
46 Boston, MA Anchorage, AK Bellevue, WA
47 Los Angeles, CA Laredo, TX Palm Bay, FL
48 Sacramento, CA Corona, CA Warren, MI
49 Portland, OR Baton Rouge, LA Roseville, CA
50 Santa Ana, CA Cincinnati, OH Coral Springs, FL
51 Tucson, AZ Norfolk, VA High Point, NC
52 Honolulu, HI Mobile, AL Boulder, CO
53 San Francisco, CA Oceanside, CA Clearwater, FL
54 Fresno, CA Glendale, AZ Simi Valley, CA
55 Washington, DC Richmond, VA Vacaville, CA
56 Chicago, IL Akron, OH Miramar, FL
57 Indianapolis, IN Orlando, FL Erie, PA
58 Detroit, MI Reno, NV Orange, CA
59 Long Beach, CA Moreno Valley, CA Davie, FL
60 Miami, FL Salt Lake City, UT Carlsbad, CA
61 New York, NY Fontana, CA Dearborn, MI
62 Oakland, CA Garden Grove, CA Hillsboro, OR
63 Vancouver, WA Lakeland, FL
64 Knoxville, TN Roanoke, VA
65 Ontario, CA Peoria, IL
66 North Las Vegas, NV Spokane Valley, WA
67 Oxnard, CA Clovis, CA
68 Buffalo, NY Sunrise, FL
69 Spokane, WA Portsmouth, VA
70 Rockford, IL Visalia, CA
71 Tempe, AZ Allentown, PA
72 Santa Rosa, CA Cambridge, MA
73 Tallahassee, FL Tuscaloosa, AL
74 Tacoma, WA Torrance, CA
75 Worcester, MA Yakima, WA
76 Modesto, CA Carson, CA
77 Glendale, CA Waukegan, IL
78 Jackson, MS North Charleston, SC
79 Fort Lauderdale, FL Waterbury, CT
80 Springfield, MO Yuma, AZ
81 Stockton, CA West Covina, CA
82 Salem, OR Burbank, CA
83 Jersey City, NJ Costa Mesa, CA
84 Springfield, MA Quincy, MA
85 Hialeah, FL Sunnyvale, CA
86 Palmdale, CA Stamford, CT
87 Lancaster, CA Wilmington, NC
88 Yonkers, NY San Mateo, CA
89 Pomona, CA El Cajon, CA
90 Newark, NJ Manchester, NH
91 Providence, RI Lowell, MA
92 San Bernardino, CA Pasadena, CA
93 Eugene, OR Dayton, OH
94 Salinas, CA Fullerton, CA
95 Ann Arbor, MI
96 Renton, WA
97 Fairfield, CA
98 Ventura, CA
99 Santa Clara, CA
100 Concord, CA
101 Santa Monica, CA
102 Escondido, CA
103 Hollywood, FL
104 Norwalk, CA
105 Victorville, CA
106 West Palm Beach, FL
107 Beaverton, OR
108 Rialto, CA
109 Daly City, CA
110 Pompano Beach, FL
111 Kent, WA
112 Flint, MI
113 Federal Way, WA
114 Westminster, CA
115 Albany, NY
116 Downey, CA
117 Bridgeport, CT
118 Antioch, CA
119 Brockton, MA
120 Gainesville, FL
121 Hayward, CA
122 Miami Gardens, FL
123 Fall River, MA
124 Santa Maria, CA
125 Hartford, CT
126 Gresham, OR
127 Vista, CA
128 Lynn, MA
129 Elizabeth, NJ
130 Vallejo, CA
131 Santa Barbara, CA
132 Chico, CA
133 Berkeley, CA
134 New Haven, CT
135 Everett, WA
136 South Gate, CA
137 Lansing, MI
138 El Monte, CA
139 Inglewood, CA
140 Paterson, NJ
141 New Bedford, MA
142 Miami Beach, FL
143 Richmond, CA
144 Compton, CA

 

Ask the Experts

Purchasing real estate for the first time is understandably a nerve-racking endeavor for many consumers. It’s neither a decision to take lightly nor a transaction to conduct without the assistance of a professional. To help ease the process, we’ve asked a panel of experts to provide insightful advice for inexperienced home buyers. Click on the experts’ profiles below to read their bios and responses to the following key questions:

  1. What should first-time home buyers consider when choosing a neighborhood?
  2. How do you know that you are financially ready to buy your first home?
  3. What do you recommend as the minimum down payment for a first-time home buyer?
  4. Will the market for first-time home buyers make a comeback in 2015?
  5. How can federal, state and local policymakers responsibly and effectively increase home affordability, particularly for first time homebuyers?
< >
  • Eric Tymoigne Assistant Professor of Economics at Lewis & Clark College
  • Robert Van Order Oliver Carr Chair in Real Estate and Professor of Finance and Economics at The George Washington University School of Business
  • Fred A. Forgey Director for the Master of Science in Real Estate Development Program at Nova Southeastern University, H. Wayne Huizenga School of Business and Entrepreneurship
  • Richard Martin Associate Professor in the Real Estate Program at University of Georgia, Terry College of Business

Eric Tymoigne

Assistant Professor of Economics at Lewis & Clark College
Eric Tymoigne
What should first-time home buyers consider when choosing a neighborhood?

It varies with what people want to do while staying in the house. For example, if you plan to have kids and to stay in the house during the entire upbringing, then public-school quality is at top of the list together with kid-friendly amenities, and safety.

How do you know that you are financially ready to buy your first home?

When you know you can still save money if you wish even after you made the mortgage payment on top of all other required expenses.

What do you recommend as the minimum down payment for a first-time home buyer?

20%.

Will the market for first time home-buyers make a comeback in 2015?

Buying a house with relative comfort requires quite a bit of financial strength. This means stable income high enough to meet the debt service as well as a comfortable amount of savings. Job market for young adults is still slow so they may not be the first time buyers. Maybe foreigners in search for real estate investment, but recent international developments are not helping here either.

How can federal, state and local policymakers responsibly and effectively increase home affordability, particularly for first time homebuyers?

They have done plenty already (low down payment, preferential terms, etc.) - probably too much. Not everybody is financially ready to own a home. Renting may make a lot of sense.

Robert Van Order

Oliver Carr Chair in Real Estate and Professor of Finance and Economics at The George Washington University School of Business
Robert Van Order
What should first-time home buyers consider when choosing a neighborhood?

Depends on how long they expect to stay and the type of unit. If short run and, say, a condo, look to how strong sales have been and if they can resell. If more permanent, it depends on lifestyle - e.g., if looking to raise kids, first thing might be schools – otherwise, amenities like accessibility, being able to walk, commuting time, and restaurants. Also check crime rate. No matter what, they will have to balance trade-offs - e.g., between distance to work and cost. Be sure to study sales of comparable housing in the area.

How do you know that you are financially ready to buy your first home?

When you are ready to commit to handling the hassle, and you have good credit. Begin a few years ahead, with accumulating money for down payment and doing things to make credit score look good. You can still buy with 5% or less down, so that is not as important as credit score and understanding the responsibility. Remember that you don’t have to own - and renting can be good choice.

What do you recommend as the minimum down payment for a first-time home buyer?

Whatever you can get away with. Leverage is a good thing if don’t have to pay too much for it. See what payments fit into your budget. If you can do 20% down, you can save on mortgage insurance (private of government) cost. Also look into combined cost of a 20% downpayment first mortgage and a second mortgage along with it.

Downpayment isn’t the only thing that matters. Look into an adjustable rate mortgage where the payment is fixed for a while and matches your expected time before selling.

Will the market for first time home-buyers make a comeback in 2015?

Maybe, but lending standards, especially regarding credit score, are still quite conservative, so upside is limited.

How can federal, state and local policymakers responsibly and effectively increase home affordability, particularly for first time homebuyers?

The major constraint now is excessively conservative underwriting, which has mostly to do with the federal level encouraging it. So get Fannie Mae and Freddie Mac to buy more loans with low FICO scores (but charge more for them) and less buy back risk. I am skeptical of affordability programs, as they are likely to be inefficient. I am in favor of using housing vouchers for mortgage payments. I also favor relaxing zoning to increase supply-for both rental and owner-occupied. Most first time buyers do not need subsidies as much as they need well-functioning markets.

Fred A. Forgey

Director for the Master of Science in Real Estate Development Program at Nova Southeastern University, H. Wayne Huizenga School of Business and Entrepreneurship
Fred A. Forgey
What should first-time home buyers consider when choosing a neighborhood?

Close proximity to those goods, services, facilities that are uniquely important to them.

How do you know that you are financially ready to buy your first home?

Having at least enough personal savings to cover up to 6 months of mortgage payments in case of unforeseen financial emergencies.

What do you recommend as the minimum down payment for a first-time home buyer?

5% should be a bare minimum to ensure that the buyer has some “skin in the game”, therefore less likely to default.

Will the market for first time home-buyers make a comeback in 2015?

Depends on interest rates and unemployment remaining low. However, there is a growing culture and belief that home ownership and employment stability is not what it once was; therefore, there is no need to make such a long-term commitment to housing choice.

Richard Martin

Associate Professor in the Real Estate Program at University of Georgia, Terry College of Business
Richard Martin
What should first-time home buyers consider when choosing a neighborhood?

Depends on how long the buyers are expecting to stay. If they view the home as a starter home with a goal of moving up relatively quickly then, obviously, they need to be looking for a neighborhood with a strong upward trajectory. In fact, they may want to consider a neighborhood that isn't currently so nice (in order to spend less) but they think will appreciate quickly. If they are going to stay for a while they need to be focused on neighborhood attributes that they are likely to value in the future. For example, they may be childless at the moment but will want to consider school quality because it could be a concern in a few years.

What do you recommend as the minimum down payment for a first-time home buyer?

Given the historically low levels of current interest rates I see no reason to put down any more than the lender is requiring of you.

Will the market for first time home-buyers make a comeback in 2015?

The most recent signs point to an increase in first time home buyers. However, the likelihood of interest rate increases (whenever they actually occur) makes this recovery fragile. If interest rates begin to increase soon and if the increases are substantial then the current increase may reverse itself.

How can federal, state and local policymakers responsibly and effectively increase home affordability, particularly for first time homebuyers?

Reduce barriers to new home construction. Nothing keeps home ownership affordable like allowing homebuilders to quickly respond to price increases by building new home when they are affordable.

Methodology

To determine the most favorable housing markets for first-time buyers, WalletHub assessed the real-estate landscape within 300 U.S. cities. We did so by examining three key dimensions: 1) Housing Affordability, 2) Real-Estate Market and 3) Living Environment. We then compiled a list of 18 relevant metrics, which are listed below with their corresponding weights. Please note that, for our sample, “city” refers to city proper and excludes surrounding metro areas.

For this particular study, we categorized the cities based on the following population sizes:

  • Large cities: More than 300,000 people
  • Midsize cities: 150,000 to 300,000 people
  • Small cities: Fewer than 150,000 people

Housing Affordability – Total Weight: 5

  • Median Household Annual Income (Adjusted for Cost of Living): Full Weight
  • Housing Costs (Median Household Annual Income Divided by Median House Price): Double Weight
  • Consumer Non-Housing Debt (Divided by Median Household Annual Income): Half Weight
  • Real-Estate Tax Rate: Full Weight

Real-Estate Market – Total Weight: 5

  • Rent-to-Price-Ratio: Double Weight
  • Sale-to-List Price Ratio: Full Weight
  • Median Home-Price Appreciation: Double Weight
  • Average Home Square Footage: Full Weight
  • Foreclosure Rate: Half* Weight

Living Environment – Total Weight: 5

 
Sources: Data used to create these rankings were obtained from the U.S. Census Bureau, the Council for Community and Economic Research, Zillow, the Federal Bureau of Investigation, Experian, CoreLogic and WalletHub research.

Author

User
Richie Bernardo is a personal finance writer at WalletHub. He graduated with a Bachelor of Journalism and a minor in business from the University of Missouri-Columbia. Previously, he was a…
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