Buying a home for the first time is an exciting and important milestone for many Americans. Their purchases make up a sizable chunk of the market, too. In 2022, 26% of home purchases were made by first-time buyers. This number is down from 34% the previous year, due in part to soaring prices. With that in mind, WalletHub has created a list of best/worst cities for first-time home buyers.
For people willing and able to invest in a house this year, the search for a first home requires careful consideration of a number of factors. Buyers must balance what they want and need with what they can afford. Often, people begin searching for their dream homes without a realistic idea of market prices, interest rates or even their eligibility to get a mortgage.
Where a home is located is just as important as what features it has. If the neighborhood is unpleasant, it can sour the experience of a great home. Potential buyers may want to narrow their search down to an area with a good reputation before getting into housing details.
To simplify the process, WalletHub compared 300 cities of varying sizes across 22 key indicators of market attractiveness, affordability and quality of life. The data set ranges from cost of living to real-estate taxes to property-crime rate.
Many Tampa residents may find it surprising that Tampa gets the number three spot in the overall rankings.
In the housing market, one significant effect of the recent high-inflation episode is that home construction has declined. This limits dips in house prices, and in some markets, such as in Tampa, prices have continued to rise.
Best/Worst Cities for First-Time Home Buyers
Click here to read the full report, including methodology, on WalletHub.
Is it the right time to buy a home?
Here is what some experts at Wallet Hub say:
This depends on where you are buying a home. Probably not the best time to buy a home in arguably overpriced markets that are found along each coast and in a few non-coastal fading “superstar” cities. But it is a great time to purchase a home in less popular markets – think the Midwest or second-tier cities throughout the country.
Brad Segal
Lecturer at University of Colorado Denver and President, Progressive Urban Management Associates
The current economic environment, including rapidly increasing inflation and interest rates, critically low housing inventories, and inflated house prices, makes it unfavorable for homebuyers, especially first-time homebuyers. Although homebuyers should be patient, given the state of the housing market and economic uncertainty, settling for “what is available” now may lead to buyers’ remorse and financial difficulties in the future. Buyers should plan to stay in a home for several years to make buying a preferable option over renting.
Bennie D. Waller
William Cary Hulsey Faculty Fellow in the Culverhouse College of Business – University of Alabama and Director, Center for Financial Responsibility – Longwood University
