Who wants to buy a home? A lot more people than there are homes to buy, and the outlook for first-time buyers is particularly grim.
About 26 million Americans plan to buy a home in the next 12 months, but just 5-6 million homes were sold in each of the past five years, according to a NerdWallet survey conducted in December 2021.
Millennials, aged about 26-41 years, are the largest group trying to buy homes, about 37%, according to the National Association of Realtors, and first-time buyers made up 31% of all home buyers. The supply of starter homes decreased by more than half from 2017-2021, according to an analysis by Realtor.com, which defined starters as single-family homes, condos, and townhomes under 1,850 square feet.
While median monthly asking rent in the U.S. surpassed $2,000 in May, the national median sale price topped $431,000, according to Redfin data.
And it’s not just low inventory and high prices, the competition is fierce for first-time homebuyers. Urban renters headed for the suburbs during the pandemic to compete for those entry-level homes, baby boomers looking to downsize also go after smaller properties, and to make matters worse, first-time home buyers must compete with investors who pay cash to fix and flip homes. These cash-rich flippers now make up about 10% of homebuyers.
Lastly, builders have largely been unable to offset the decline in starter homes.
For the house hunter who still has the moxie to try, turn to this list of cheapest cities to buy a home. To find the cheapest places for homebuyers and the best places for starter homes, StorageCafe, an online platform that provides storage unit listings across the nation, looked at data from 108 U.S. cities with populations ranging from 90,000 to 8 million. The metrics include property values, number of sales between 2015 and 2021, housing affordability, cost of living, unemployment rate, homebuyers’ ages, the ratio of renters to owners, income levels, FHA lending limits and average mortgage rates. They scored each city on these metrics then ranked them based on their potential with regard to starter homes.
Here are the best cities for first-time homebuyers:
1. Fort Wayne, Ind.
- Median property value: $113,144
- Cost of living index: 87
- Homebuyers' age: 35
- 2021 average mortgage rate: 3.14%
The analysis used average mortgage rates from 2021, and rates have since gone up, hovering near 6% in June, but last year's rates might still give you a sense of where rates tend to be lower.
2. Columbia Md.
- Median property value: $264,055
- Cost of living index:106
- Homebuyers' age: 39
- 2021 average mortgage rate: 3.00%
3. Pittsburgh
- Median property value: $170,042
- Cost of living index:104
- Homebuyers' age: 38
- 2021 average mortgage rate: 3.03%
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4. Fishers, Ind.
- Median property value: $258,679
- Cost of living index: 92
- Homebuyers' age: 38
- 2021 average mortgage rate: 3.14%
5. Columbus, Ohio
- Median property value: $164,229
- Cost of living index: 92
- Homebuyers' age: 39
- 2021 average mortgage rate: 3.16%
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6. Carmel, Ind.
- Median property value: $244,670
- Cost of living index: 104
- Homebuyers' age: 40
- 2021 average mortgage rate: 3.01%
7. St. Paul, Minn.
- Median property value: $286,151
- Cost of living index: 92
- Homebuyers' age: 38
- 2021 average mortgage rate: 3.14%
8. Cary, N.C.
- Median property value: $308,611
- Cost of living index: 94
- Homebuyers' age: 43
- 2021 average mortgage rate: 3.02%
9. Manchester, N.H.
- Median property value: $276,257
- Cost of living index: 111
- Homebuyers' age: 40
- 2021 average mortgage rate: 3.03%
10. Minneapolis
- Median property value: $288,926
- Cost of living index: 105
- Homebuyers' age: 40
- 2021 average mortgage rate: 3.01%
11. Nashville, Tenn.
- Median property value: $318,046
- Cost of living index: 93
- Homebuyers' age: 39
- 2021 average mortgage rate: 3.02%
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12. Bakersfield, Calif.
- Median property value: $216,063
- Cost of living index: 102
- Homebuyers' age: 40
- 2021 average mortgage rate: 3.04%
13. Arvada, Colo.
- Median property value: $476,672
- Cost of living index: 114
- Homebuyers' age: 39
- 2021 average mortgage rate: 3.00%
14. Alexandria, Va.
- Median property value: $432,703
- Cost of living index: 137
- Homebuyers' age: 40
- 2021 average mortgage rate: 2.99%
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15. Centennial, Colo.
- Median property value: $444,747
- Cost of living index: 114
- Homebuyers' age: 39
- 2021 average mortgage rate: 3.00%
16. Denver
- Median property value: $505,777
- Cost of living index: 113
- Homebuyers' age: 39
- 2021 average mortgage rate: 3.00%
17. Raleigh, N.C.
- Median property value: $279,304
- Cost of living index: 94
- Homebuyers' age: 43
- 2021 average mortgage rate: 3.02%
18. Germantown, Md.
- Median property value: $261,511
- Cost of living index: 157
- Homebuyers' age: 39
- 2021 average mortgage rate: 3.00%
19. St. Petersburg, Fla.
- Median property value: $283,684
- Cost of living index: 96
- Homebuyers' age: 53
- 2021 average mortgage rate: 3.11%
20. Lakewood, Colo.
- Median property value: $380,165
- Cost of living index: 114
- Homebuyers' age: 39
- 2021 average mortgage rate: 3.00%
21. Aurora, Colo.
- Median property value: $360,542
- Cost of living index: 114
- Homebuyers' age: 39
- 2021 average mortgage rate: 3.00%
22. Boca Raton, Fla.
- Median property value: $280,104
- Cost of living index: 116
- Homebuyers' age: 51
- 2021 average mortgage rate: 3.11%
23. Modesto, Calif.
- Median property value: $319,328
- Cost of living index: 119
- Homebuyers' age: 39
- 2021 average mortgage rate: 3.04%
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24. Chandler, Ariz.
- Median property value: $388,450
- Cost of living index: 103
- Homebuyers' age: 51
- 2021 average mortgage rate: 3.12%
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25. Las Vegas
- Median property value: $265,170
- Cost of living index: 107
- Homebuyers' age: 50
- 2021 average mortgage rate: 3.11%
26. Washington, D.C.
- Median property value: $623,135
- Cost of living index: 157
- Homebuyers' age: 40
- 2021 average mortgage rate: 4.90%
27. Scottsdale, Ariz.
- Median property value: $478,609
- Cost of living index: 103
- Homebuyers' age: 51
- 2021 average mortgage rate: 3.12%
28. Spokane, Wash.
- Median property value: $300,881
- Cost of living index: 107
- Homebuyers' age: 44
- 2021 average mortgage rate: 3.06%
29. Peoria, Ariz.
- Median property value: $373,588
- Cost of living index: 103
- Homebuyers' age: 51
- 2021 average mortgage rate: 3.12%
30. Gilbert, Ariz.
- Median property value: $409,324
- Cost of living index: 103
- Homebuyers' age: 51
- 2021 average mortgage rate: 3.12%
31. Portland, Ore.
- Median property value: $484,475
- Cost of living index: 132
- Homebuyers' age: 44
- 2021 average mortgage rate: 3.08%
Check out how all 108 cities ranked and see the methodology for this study at StorageCafe.com
