2023’s Best & Worst Cities for First-Time Home Buyers

Buying a home for the first time is an exciting and important milestone for many Americans. Their purchases make up a sizable chunk of the market, too. In 2022, 26% of home purchases were made by first-time buyers, down from 34% the previous year due in part to soaring prices.

For people willing and able to invest in a house this year, the search for a first home requires careful consideration of a number of factors. Buyers must balance what they want and need with what they can afford. Often, people begin searching for their dream homes without a realistic idea of market prices, interest rates or even their eligibility to get a mortgage.

Where a home is located is just as important as what features it has. If the neighborhood is unpleasant, it can sour the experience of a great home. Potential buyers may want to narrow their search down to an area with a good reputation before getting into housing details.

To simplify the process, WalletHub compared 300 cities of varying sizes across 22 key indicators of market attractiveness, affordability and quality of life. Our data set ranges from cost of living to real-estate taxes to property-crime rate.

Main Findings

Best Places for First-Time Home Buyers

Note: With the exception of “Total Score,” all of the columns in the table above depict the relative rank of that city, where a rank of 1 represents the best conditions for that metric category.

Most

• 1. Springfield, IL
• 2. Peoria, IL
• 3. Montgomery, AL
• 4. Detroit, MI
• 5. Flint, MI

Least

• 238. Los Angeles, CA
• T-239. Glendale, CA
• T-239. Berkeley, CA
• T-239. Santa Monica, CA
• T-239. Santa Barbara, CA

Lowest

• 1. Laredo, TX
• 2. Flint, MI
• 3. Erie, PA
• 4. Jackson, MS
• T-5. Oklahoma City, OK
• T-5. Toledo, OH

Highest

• T-253. San Jose, CA
• T-253. New York, NY
• T-253. Honolulu, HI
• T-253. Santa Clara, CA
• T-253. Santa Barbara, CA
• T-253. Sunnyvale, CA

Lowest

• 1. Honolulu, HI
• 2. Montgomery, AL
• 3. Colorado Springs, CO
• 4. Cambridge, MA
• 5. Denver, CO

Highest

• 296. Rochester, NY
• 297. Bridgeport, CT
• 298. Elizabeth, NJ
• 299. Paterson, NJ
• 300. Waterbury, CT

Highest

• T-1. Flint, MI
• T-1. Dayton, OH
• T-1. Detroit, MI
• 4. Cleveland, OH
• 5. Rochester, NY

Lowest

• 296. Sunnyvale, CA
• 297. Santa Barbara, CA
• 298. San Francisco, CA
• 299. Berkeley, CA
• 300. Santa Monica, CA

Highest

• 1. Miami Gardens, FL
• 2. Sunnyvale, CA
• 3. Stockton, CA
• 4. Richmond, CA
• 5. Vallejo, CA

Lowest

• 296. Waterbury, CT
• 297. Peoria, IL
• 298. Jackson, MS
• 299. Rockford, IL
• 300. Hampton, VA

Lowest

• 1. Port St. Lucie, FL
• 2. Sterling Heights, MI
• 3. Mission Viejo, CA
• 4. Santa Clarita, CA
• 5. Allen, TX

Highest

• 294. Miami Beach, FL
• 295. St. Louis, MO
• 296. Birmingham, AL
• T-297. Springfield, MO
• T-297. Salt Lake City, UT

Lowest

• 1. Baton Rouge, LA
• 2. Westminster, CO
• 3. New Orleans, LA
• T-4. Aurora, CO
• T-4. Lakewood, CO

Highest

• T-239. Bridgeport, CT
• T-239. Stamford, CT
• T-241. Modesto, CA
• T-241. Honolulu, HI
• T-241. Stockton, CA
• T-241. Bakersfield, CA

Show More

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 there be any long lasting effects of the current economic downturn that first-time buyers should consider?
5. Given that 8 out of 10 millennials say they regret buying a home in the last year, do you consider 2023 to be a good year to buy a home?
6. How can federal, state and local policymakers responsibly and effectively increase home affordability, particularly for first time homebuyers?

Brad Segal
Lecturer at University of Colorado Denver and President, Progressive Urban Management Associates
Read More

Kevin J. Boyle
Willis Blackwood Director, Blackwood Department of Real Estate, Pamplin College of Business – Virginia Polytechnic Institute and State University
Read More

Bennie D. Waller
William Cary Hulsey Faculty Fellow in the Culverhouse College of Business – University of Alabama and Director, Center for Financial Responsibility – Longwood University
Read More

Jake Wegmann
Associate Professor, School of Architecture – University of Texas at Austin
Read More

Georgette Chapman Phillips
Kevin L. and Lisa A. Clayton Dean – Lehigh University, College of Business
Read More

John C. Banko
Wells Fargo Faculty Fellow; Instructional Associate Professor, Finance and Director of Wealth Management Program – University of Florida
Read More

Methodology

To determine the most favorable housing markets for first-time home buyers, WalletHub compared a sample of 300 U.S. cities (varying in size) across three key dimensions: 1) Affordability, 2) Real-Estate Market and 3) Quality of Life.

We evaluated those dimensions using 22 relevant metrics, which are listed below with their corresponding weights. Each metric was graded on a 100-point scale, with a score of 100 representing the most favorable conditions for first-time home buyers. Data for metrics marked with an asterisk (*) were available at the state level only.

Finally, we determined each city’s weighted average across all metrics to calculate its overall score and used the resulting scores to rank-order our sample. Our sample considers only the city proper in each case and excludes cities in the surrounding metro area. Each city was categorized according to the following population-size guidelines:

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

Affordability – Total Points: 33.33

• Housing Affordability: Triple Weight (~14.28 Points)
  Note: This metric was calculated as follows: Median House Price / Median Annual Household Income.
• Average Cost of Homeowner’s Insurance*: Full Weight (~4.76 Points)
• Cost of Living: Full Weight (~4.76 Points)
• Cost per Square Foot: Full Weight (~4.76 Points)
  Note: This metric measures specifically the median list price per average home square footage.
• Real-Estate Tax Rate: Full Weight (~4.76 Points)

Real-Estate Market – Total Points: 33.33

• Rent-to-Price-Ratio: Double Weight (~5.56 Points)
• Median Days on the Market: Full Weight (~2.78 Points)
• Active Listings per Capita: Full Weight (~2.78 Points)
• Median Home-Price Appreciation: Double Weight (~5.56 Points)
• Foreclosure Rate: Full Weight (~2.78 Points)
• Share of Housing Units Built between 2010 and 2021: Full Weight (~2.78 Points)
• Building-Permit Activity: Full Weight (~2.78 Points)
  Note: This metric measures the number of unit permits pulled per 1,000 residents.
• Mortgage Lenders per Capita: Full Weight (~2.78 Points)
• Real Estate Agents per Capita: Full Weight (~2.78 Points)
• Homeownership Rate for Millennials: Full Weight (~2.78 Points)

Quality of Life – Total Points: 33.33

• Weather: Full Weight (~4.17 Points)
  Note: This metric is based on WalletHub’s “Cities with the Best & Worst Weather” ranking.
• Quality of School System*: Double Weight (~8.33 Points)
  Note: This metric is based on WalletHub’s “States with the Best & Worst School Systems” ranking.
• Driver-Friendliness: Full Weight (~4.17 Points)
  Note: This metric is based on WalletHub’s “Best & Worst Cities to Drive in” ranking.
• Job Market: Full Weight (~4.17 Points)
  Note: This metric is based on WalletHub’s “Best & Worst Cities for Jobs” ranking.
• Total Home-Energy Cost: Full Weight (~4.17 Points)
• Violent-Crime Rate: Full Weight (~4.17 Points)
• Property-Crime Rate: Full Weight (~4.17 Points)

Sources: Data used to create this ranking were collected from the U.S. Census Bureau, Bureau of Labor Statistics, Council for Community and Economic Research, U.S. Department of Housing and Urban Development, Federal Bureau of Investigation, Insurance Information Institute, The National Association of Realtors, ATTOM, a property data provider, and WalletHub research.

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