These Are the 10 Best Cities for First-Time Homebuyers

Last year was among the most extraordinary in the recent history of America’s residential real estate market. The last time prices of homes rose as rapidly as in 2021 was 2005/2006, which happened just before the housing crisis and the Great Recession. One measure of home price increases is the carefully followed S&P CoreLogic Case-Shiller Indices, which measure real estate prices. In October, the national figure rose 19.1% from the same month last year. In Phoenix, the increase was an extraordinary 32.3%.

Among the reasons for these increases were low mortgage prices — the lowest in decades. This already has started to change for the worse in 2022. Also, the incomes of middle-class and upper-class Americans increased for many last year.

Finally, the COVID-19 pandemic has triggered many companies to force people to work from home to lower infection rates. For many workers, this situation has become permanent, so they can work where they would like to. This has helped some Americans move from expensive coastal cities like New York and San Francisco to less expensive ones inland.

All homebuyers and homeowners are not created equal. Many baby boomers have paid off their mortgages and so have large residential equity positions. Buyers who want to own their first home face a run-up in prices and a recent rise in mortgage rates.

Realtor.com’s just-released Best Markets for First-Time Home Buyers 2022 study collected data on the population size of cities considered, household resident count, commute times, unemployment rates and “food and beverage establishments.” Most of this information comes from government sources and the Realtor.com databases. The universe of small cities and towns considered were within the 100 largest metro areas. This turned out to cover 1,112 places with populations over 5,000. The age group considered was people 25 to 34 years old.

These are the top 10 cities for first-time homebuyers:

City Pop. 25 to 34 Unemployment Rate
Magna, Utah 15.4% 2.3%
Chalco, Neb. 14.5% 2.2%
Mauldin, S.C. 13.5% 2.3%
Beech Grove, Ind. 15.6% 2.7%
Portsmouth, Va. 16.0% 3.2%
Cottage Grove, Wis. 15.0% 2.2%
Grimes, Iowa 14.6% 3.2%
Kuna, Idaho 13.7% 2.3%
Ferndale, Mich. 15.9% 3.2%
Maitland, Fla. 17.5% 3.2%

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