Realtor.com® Forecasts the 10 Best Markets for First-Time Homebuyers in 2024
- Optimism of first-time homebuyers, with 61% indicating that now is a good time to buy
- Affordability in the top markets, with an average 2023 listing price to income ratio of 3.1 compared to the national rate of 5.4
- Forecasted 2024 home price growth rate of 6.1% in the top markets, considerably higher than the national expected decline of -1.7%
- Average count of 40.2 active listings per 1,000 existing households in the top markets in 2023
- None.
Insights
From the perspective of a Market Research Analyst, the findings in this report are indicative of a significant shift in the housing market, particularly for first-time homebuyers. The affordability of homes in small to mid-size towns presents a notable contrast to the national average, with a listing price to income ratio of 3.1, far below the national rate of 5.4. This gap suggests that these towns may become increasingly attractive to buyers, potentially leading to a redistribution of housing demand from urban to more suburban or rural areas.
Furthermore, the average median listing price being 42% lower than the national median provides a strong incentive for first-time buyers. The potential for price appreciation, with an average forecasted growth rate of 6.1% compared to the national expected decline of -1.7%, could also influence buyer behavior by suggesting a promising return on investment for those entering the market in these areas.
Lastly, the higher active listings per 1,000 households indicate a healthier inventory level, which could reduce the competition among buyers and potentially slow down the rapid price inflation seen in other over-saturated markets. This balance between supply and demand is crucial for maintaining a stable and accessible housing market for first-time buyers.
Analyzing the data from a financial perspective, the report's emphasis on affordability and forecasted price growth rates in specific markets is particularly relevant for investors and stakeholders in the real estate and construction sectors. The divergence between the growth rates in these small to mid-size towns and the national decline suggests that these areas might offer a more resilient investment opportunity amid broader market downturns.
The economic implications of an influx of first-time homebuyers in these areas could lead to increased local spending, supporting businesses and potentially boosting the local economy. This could also attract the attention of real estate investment trusts (REITs) and other institutional investors seeking stable yields in a volatile market environment.
It is important for stakeholders to consider the long-term sustainability of this growth. If these markets become too popular, they may face the same issues that currently plague larger cities, such as inventory shortages and inflated property values, which could eventually erode the affordability that is currently driving their appeal.
From an economic standpoint, the report sheds light on underlying trends in demographic movements and their economic implications. The attractiveness of small to mid-size towns for first-time homebuyers could signal a broader trend of demographic decentralization, potentially leading to a more balanced economic development across different regions.
The lower than average commute times associated with these areas, combined with the cultural and social amenities, could improve the quality of life for residents, which is a critical factor in attracting and retaining a skilled workforce. This could have positive ripple effects on local economies, including job creation and increased economic activity.
However, it is crucial to monitor whether these markets can sustain the influx of new residents without experiencing the downsides of rapid growth, such as infrastructure strain and increased cost of living. The challenge for policymakers and urban planners will be to manage this growth in a way that preserves the affordability and livability that are currently drawing buyers to these markets.
Small and Mid-Size Towns Prove to Be the Hottest Options for Buyers Starting Their Home Ownership Journey
"Buying a first home can be a daunting task. Couple high interest rates with historically low inventory of homes available for sale in 2023 and hopeful buyers have faced a particularly challenging market," said Danielle Hale, Chief Economist, Realtor.com®. "While affordability will remain an issue in 2024, a recent Realtor.com® survey showed that
The Realtor.com® analysis of Best Markets for First-Time Homebuyers uncovers a collection of small to mid-size towns and cities that are hidden gems of opportunity where affordability meets healthy inventory, culture and liveliness, lower than average commute times, forecasted price growth, and good company of similar-aged peers.
Affordability - As one of the biggest purchases consumers will make in their lives, affordability is a major decision driver. In its analysis, Realtor.com® looked at listing prices compared to gross household incomes of 25- to 34-year-olds in a city for the past 12 months to understand home affordability. A lower ratio indicates a more affordable place to live. The top markets in this year's list had an average 2023 listing price to income ratio of 3.1 compared to the national rate of 5.4. Additionally, homes in these towns/cities had an average median listing price that is
Investing in growth - Buying a home is not only a large investment up front, it's a commitment for the duration of ownership, which means investing in the ongoing upkeep and maintenance of the home. Naturally, first-time home buyers are looking for homes that fit everything they want, but also provide opportunities for their investment to grow. The top markets are located within metro areas that have an average forecasted 2024 home price growth rate of
Options to buy - At a time marked by chronically low inventory levels, the top markets had an average count of 40.2 active listings per 1,000 existing households in 2023, and one area in particular,
Things to do - It's not only about the house but what surrounds it, and first-time buyers are keen on finding areas that have plenty of things to do. The top places on this year's list have great options for restaurants, cafes, bars, shopping, and entertainment businesses such as theaters, comedy clubs, and arts classes per point of interest data provided by Yelp. As a group, the top cities and towns have 16.6 of these businesses per 1,000 households, slightly higher than the overall city/town average of 15.6. However,
Shorter commutes - The time it takes getting to and from work is a major consideration for home buyers, especially as return to office becomes more prevalent. With an average expected 2024 commute time of 24 minutes for the top cities on this year's list, they clock in at less than the city/town average of 30 minutes and the national rate of 29 minutes – saving commuters about 50 hours per year for a 5-day commuter.
Youthful towns - Along with having things to do, first-time buyers may want to be close to people in similar life stages and around the same ages. The share of homeowners between the ages of 25 and 34 in this year's top markets is
Realtor.com® Best Markets for First-Time Homebuyers Ranked | |||||||||
Rank | Place Name | Metro Name | Region | 2024 Forecasted 25-34 Homeowner Share of Households | 12 Month Ending November 2023 Inventory per 1000 Household | 12 Month Ending November 2023 Median Listing Price | 12 Month Ending November 2023 Price to Income Ratio | 2024 Forecasted Average Travel Time to Work (Minutes) | November 2023 Yelp Culture and Lifestyle Businesses per 1000 Households |
1 | Northeast | 8.2 % | 34.1 | 2.5 | 22 | 14.9 | |||
2 | South | 7.6 % | 50.2 | 3.0 | 25 | 17.9 | |||
3 | Midwest | 7.3 % | 47.8 | 4.0 | 23 | 18.0 | |||
4 | Northeast | 6.6 % | 37.8 | 3.4 | 23 | 19.2 | |||
5 | Midwest | 6.4 % | 37.6 | 3.0 | 21 | 13.0 | |||
6 | Northeast | 7.2 % | 26.6 | 3.1 | 21 | 22.6 | |||
7 | Midwest | 9.5 % | 33.1 | 4.3 | 21 | 20.0 | |||
8 | South | 9.7 % | 43.6 | 3.2 | 26 | 14.1 | |||
9 | Northeast | 7.4 % | 31.6 | 2.0 | 20 | 9.2 | |||
10 | South | 10.9 % | 59.3 | 2.7 | 33 | 16.7 | |||
5.4 % | 38.6 | 5.4 | 29 | ||||||
Complete details of the report can be found on Realtor.com®, along with a First-Time Home Buyers Resource Center, multiple guides on mortgages and tools like a RealCost™ Buying Power Tool to help prospective buyers understand how much house they can afford.
Methodology
This year, the candidate list of places was filtered to only expose areas with an expected 2024 population of at least 5,000. The inventory of homes for sale and local median listing prices are from Realtor.com® December 2022 to November 2023 listing data and are reported at the city/place level. The cities and places are defined as postal codes mapped to Census Designated places and reflect approximate but not precise city or place boundaries. The population, household count, household income, and average commute time data were sourced from 2023 and 2024 Claritas estimates based on Census Bureau data. Population and household count numbers are at the city/place level but are also composed of mapped zip code data while household incomes and average commute times at the city/place level. The stated forecasted unemployment rates are Moody's Analytics projections of
About Realtor.com®
Realtor.com® is an open real estate marketplace built for everyone. Realtor.com® pioneered the world of digital real estate more than 25 years ago. Today, through its website and mobile apps, Realtor.com® is a trusted guide for consumers, empowering more people to find their way home by breaking down barriers, helping them make the right connections, and creating confidence through expert insights and guidance. For professionals, Realtor.com® is a trusted partner for business growth, offering consumer connections and branding solutions that help them succeed in today's on-demand world. Realtor.com® is operated by News Corp [Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc. For more information, visit Realtor.com®.
Media contact: press@realtor.com
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SOURCE Realtor.com
FAQ
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