For many, it seems that becoming a first-time homebuyer in the U.S. is only getting harder. Mortgage rates are high, and some people can't afford to take the financial plunge and choose to keep renting while waiting for the market to change.
Creditnews Research analyzed America's 50 largest metro areas to find the best and worst housing markets for first-time buyers. The cities were scored based on the following following criteria:
- Mortgage affordability
- Market access
- Bargaining power
- Employment growth
- Livability
The analysis focused on the top 50 metro areas by population because, typically, first-time homebuyers are more likely to move for work and are looking at larger cities.
"While there may be smaller cities that offer cheaper housing, larger metropolitan areas are less likely to offer the blend of employment opportunities, labor market tightness, and housing stock," the report states.
The best metro area for first-time buyers: Pittsburgh
Pittsburgh is the No. 1 metro area for first-time homebuyers because it offers the best affordability for a starter home.
The median listing home price in Pittsburgh is $255,000, according to Realtor.com. That price tag is $162,000 lower than the median home sales price in the U.S., $417,000 as of the fourth quarter of 2023, according to Motley Fool.
The Pennsylvania city also ranked second in listing price cuts, giving buyers higher bargaining power. The average Pittsburgh home value is $216,662, up 4.8% over the past year, according to Zillow.
Despite those high rankings, Pittsburgh's labor market is still growing. It ranked 31st for employment growth in the Creditnews analysis.
10 best metro areas for first-time homebuyers
- Pittsburgh, PA
- Austin-Round Rock, TX
- San Antonio-New Braunfels, TX
- Birmingham-Hoover, AL
- Jacksonville, FL
- New Orleans-Metairie, LA
- Miami-Fort Lauderdale-West Palm Beach, FL
- Dallas-Fort Worth-Arlington, TX
- Cleveland-Elyria, OH
- Raleigh, NC
The Austin-Round Rock metro area is the second-best place for first-time homebuyers in 2024.
The Texas city is growing in popularity, but ranked first for market access, with its home listings staying on the market the longest, according to Creditnews.
The analysis states Austin is also a top-10 city for employment growth and one of the most livable cities in the U.S.
The Southern state has become a growing base for different industries, including tech and aerospace. For the sixth time in eight years, according to U-Haul, Texas ranked as the No. 1 state where Americans are moving to.
As of 2022, Texas leads the nation as home to the most Fortune 500 companies.
10 worst metro areas for first-time homebuyers: San Jose
The San Jose-Sunnyvale-Santa Clara metro area was ranked the worst for first-time buyers in 2024.
San Jose ranked at the bottom of the list because of its lack of mortgage affordability, with starter home prices starting at $965,068, according to the Creditnews analysis,
The area is about an hour's drive south of San Francisco and is most notable for its connection to Silicon Valley. Major global tech companies like eBay, PayPal and Zoom all have their headquarters in San Jose.
The worst metro areas for first-time buyers
- San Jose, CA
- San Diego-Carlsbad, CA
- Los Angeles-Long Beach-Anaheim, CA
- Denver-Aurora-Lakewood, CO
- Riverside-San Bernardino-Ontario, CA
- San Francisco-Oakland-Hayward, CA
- Provide-Warwick, RI
- Sacramento-Roseville-Arden-Arcade, CA
- Portland-Vancouver-Hillsboro, WA
- Salt Lake City, UT
The second-worst metro area for first-time home buyers is San Diego-Carlsbad, California.
The area has an average home price of $651,891 and lacks mortgage affordability. San Diego ranked 26th for livability but ranks worse than Los Angeles for market access and bargaining power.
Given its proximity to Mexico, San Diego is home to one of the busiest border crossings. After Los Angeles, it is the second most populous city in California.
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