According to Zillow, Orlando and Tampa top the list as the best markets for first time buyers with affordable homes and relatively more inventory than other markets. Indianapolis, Las Vegas, and San Antonio round out the top five with San Francisco and Silicon Valley dropping to the bottom of markets for 2017.
Zillow’s list of the best markets for first time buyers is based on five metrics:
- Lower median home value for a more affordable down payment
- Strong home value forecast as an indicator of building equity
- Higher inventory-to-household ratio to capture available supply
- Shorter Breakeven Horizon to show a financial advantage of buying over renting
- Greater share of listings with price cuts to indicate a less competitive market
First-time home buyers looking for friendly market conditions would do well to avoid the busy, headline-making markets in the West and the Northeast, and focus their search instead on homes in slower-moving, more sedate Southern and Midwestern metros.
Often budget-constrained, first-time home buyers in particular are typically better-served by markets in which both competition is less fierce (and bidding wars – and the rapid escalation in prices that follows – less common) and affordable options are more abundant. Making a smart financial decision also matters, so it’s important that the financial advantages of buying soon outweigh the shorter-term savings of renting, and that expected home value appreciation is strong.