For those Americans in the market for a new home, buying is a priority, and while some remain optimistic about their prospects, many are stymied by a worsening economy and higher mortgage rates.
That’s according to NerdWallet’s 2023 home buyer report, a survey of 2,051 U.S. adults from Dec. 1-5, 2022.
Some 70% of those who had plans to purchase a home in 2022 were unsuccessful, and 4% canceled their plans because they changed their mind about ever purchasing a home, the survey found.
A recent study by Bankrate sought to determine the best metros for first-time homebuyers by looking at a combination of factors in 50 U.S. metros: affordability, job market, wellness and culture, and the tightness of the housing market.
The worst metros on their list are the usual suspects: Washington, D.C. ranks last, with weak job growth and a tight housing market. Behind it came notoriously unaffordable Boston, New York and San Diego, all cities that ranked high for their wellness and culture (which includes access to healthcare, food and community services, diversity, and the number of arts, entertainment and recreation establishments per capita.)
Overall, they found cities like Austin, Kansas City and Raleigh scored highest across the board, making these places most appealing to first-time buyers. Austin’s robust job market makes it desirable, but with median home prices around $565,000, it’s not super affordable. The NerdWallet survey found that prospective buyers hope to spend $269,200, on average. This in itself is likely unrealistic; median home prices across the nation were $379,100 as of October 2022.
This list is of the most affordable of the 50 metros. These might appeal to first-time buyers struggling to scrape together a down payment and qualify for mortgages at higher rates. The affordability ranking in Bankrate’s study includes the typical income needed to qualify for a mortgage, with a 10% down payment, a 5% mortgage rate on a 30-year loan and a mortgage debt-to-income ratio of 25%. It also factors in the overall cost of living of the area and how the mortgage payment compares to median household income in each area.
These are the most affordable metro areas from Bankrate’s ranking of cities for first-time homebuyers.
1. Cleveland
- Job market rank: 49
- Market tightness rank: 40
- Wellness and culture rank: 46
- Overall: 23
Cleveland ranks No. 1 for affordability. The median sold price in Cleveland as of February 2023 was $121,800, according to Realtor.com.
In all rankings, 1 is best and 50 is worst for first time homebuyers. The 'overall' ranking factors in all four categories.
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2. St. Louis
- Job market rank: 23
- Market tightness rank: 41
- Wellness and culture rank: 38
- Overall: 8
Median listing price in St. Louis is $220,000, according to Realtor.com.
3. Kansas City
- Job market rank: 28
- Market tightness rank: 11
- Wellness and culture rank: 38
- Overall: 2
The median listing price in Kansas City is $225,000.
4. Detroit
- Job market rank: 37
- Market tightness rank: 39
- Wellness and culture rank: 47
- Overall: 17
Detroit’s median listing price is $79,500.
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5. Cincinnati
- Job market rank: 29
- Market tightness rank: 47
- Wellness and culture rank: 45
- Overall: 21
The median listing price in Cincinnati is $229,900.
6. Columbus, Ohio
- Job market rank: 39
- Market tightness rank: 42
- Wellness and culture rank: 43
- Overall: 28
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7. Hartford, Conn.
- Job market rank: 45
- Market tightness rank: 36
- Wellness and culture rank: 20
- Overall: 14.5
8. Indianapolis
- Job market rank: 9.5
- Market tightness rank: 33
- Wellness and culture rank: 41
- Overall: 7
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9. Philadelphia
- Job market rank: 46
- Market tightness rank: 32
- Wellness and culture rank: 24.5
- Overall: 14.5
10. Memphis
- Job market rank: 47
- Market tightness rank: 15.5
- Wellness and culture rank: 50
- Overall: 25
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11. Pittsburgh
- Job market rank: 50 (the worst)
- Market tightness rank: 23
- Wellness and culture rank: 34
- Overall: 26
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12. Oklahoma City
- Job market rank: 12
- Market tightness rank: 24
- Wellness and culture rank: 42
- Overall: 6
13. Minneapolis-St. Paul
- Job market rank: 5
- Market tightness rank: 43
- Wellness and culture rank: 16
- Overall: 4
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14. Milwaukee
- Job market rank: 40
- Market tightness rank: 50 (the worst)
- Wellness and culture rank: 32
- Overall: 32
15. Louisville, Ky.
- Job market rank: 38
- Market tightness rank: 44
- Wellness and culture rank: 48.5
- Overall: 34
>> Also see: Hottest and Most Competitive Rental Markets
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16. Buffalo, N.Y.
- Job market rank: 32
- Market tightness rank: 29
- Wellness and culture rank: 44
- Overall: 20
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17. Jacksonville, Fla.
- Job market rank: 9.5
- Market tightness rank: 8.5
- Wellness and culture rank: 36
- Overall: 5
18. Richmond, Va.
- Job market rank: 34.5
- Market tightness rank: 37
- Wellness and culture rank: 31
- Overall: 29
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19. Virginia Beach-Norfolk-Newport News, Va.
- Job market rank: 33
- Market tightness rank: 49
- Wellness and culture rank: 38
- Overall: 37
20. Baltimore (tie)
- Job market rank: 42
- Market tightness rank: 46
- Wellness and culture rank: 21
- Overall: 38
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20. San Antonio, Texas (tie)
- Job market rank: 30
- Market tightness rank: 12
- Wellness and culture rank: 40
- Overall: 19
22. Raleigh, N.C.
- Job market rank: 19
- Market tightness rank: 1 (the best)
- Wellness and culture rank: 17.5
- Overall: 3
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23. Birmingham, Ala.
- Job market rank: 11
- Market tightness rank: 22
- Wellness and culture rank: 48.5
- Overall: 18
24. Charlotte, N.C.
- Job market rank: 25
- Market tightness rank: 19.5
- Wellness and culture rank: 22.5
- Overall: 12
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25. Chicago
- Job market rank: 43
- Market tightness rank: 45
- Wellness and culture rank: 12.5
- Overall: 40
26. Dallas
- Job market rank: 7
- Market tightness rank: 18
- Wellness and culture rank: 24.5
- Overall: 9
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27. Providence, R.I.
- Job market rank: 17
- Market tightness rank: 48
- Wellness and culture rank: 33
- Overall: 33
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28. Houston
- Job market rank: 36
- Market tightness rank: 31
- Wellness and culture rank: 26
- Overall: 35
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29. Tampa-St. Petersburg, Fla.
- Job market rank: 6
- Market tightness rank: 17
- Wellness and culture rank: 35
- Overall: 13
>> Also see: States Where It Can Be Cheaper to Build a House Than to Buy One
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30. New Orleans
- Job market rank: 48
- Market tightness rank: 6
- Wellness and culture rank: 28.5
- Overall: 39
See the full ranking and methodology at Bankrate.com.
