Strong competition in today’s expensive housing market has sidelined some first-time home buyers, especially in large metropolitan areas. These buyers typically represent around 40% of the market, but now it’s less than a third, according to the National Association of Realtors. The majority are millennials, between the ages of 25 and 34.
However, there is still hope for home ownership. While the pandemic has spurred strong demand for housing, it has also allowed for more flexibility in where people can live, which benefits those same first-time buyers.
So where are the best bets for them in 2021? Not surprisingly, the Midwest.
Four of the Top 10 Markets for First-Time Buyers, as determined by Realtor.com, are in the Midwest. Bloomington, Illinois, leads the list. Iowa City, Iowa, was second, followed by Kalamazoo, Michigan; Great Falls, Montana; Eau Claire, Wisconsin; Savannah, Georgia; Schenectady, New York; Taylorville, Utah; Harrisonburg, Virginia; and Rapid City, South Dakota.
All major markets have median home prices below the current national median of $ 370,000. Kalamazoo, Michigan has the lowest median house price at $ 155,000, while Taylorsville, Utah has the highest price at $ 350,000.
But it’s not just a question of price and affordability. To determine the best cities, Realtor.com looked at house prices relative to local incomes, market share of 25- to 34-year-olds, availability of homes for sale, employment opportunities, distance to work. and amenities. like bars and restaurants. He also limited the ranking to one city by state.
“With 50% fewer homes on the market this year than last year, the US real estate market is competitive for all buyers,” said Danielle Hale, chief economist at Realtor.com. “New buyers are at a greater disadvantage because they don’t have the funds from a previous home sale to help pay their down payment or to compete in bidding wars.”
Another survey by Realtor.com of potential first-time buyers found that 44% of Millennials said they didn’t have enough for a down payment. Part of the reason may be that they are not aware of programs designed to help them.
“There are great loan programs available only to first-time home buyers that allow as little as 5% down payment without mortgage insurance,” said Jennifer Myers, real estate agent at Dwell who often works with Generation Y and is one itself. “There are programs like this across the country and many first-time buyers are eligible, but just don’t know about these great ways to make their first home more affordable.
If buying is out of the question, however, the best cities to find affordable luxury apartments for rent are predominantly in the South, according to another study by RENTCafe, an apartment listing site. Georgia, especially the Atlanta area, took the top spots. The cities of Alabama and South Carolina followed on the list.