The 10 Top Cities for First-Time Homebuyers, According to Zillow

First-time homebuyers are becoming one of the largest segments of the real estate market, making up half of all buyers in 2023. While this demographic continues to grow, though, it is forced to reckon with an expensive housing market that does not necessarily favor them.

When interest rates do eventually come down from their recent record highs, it's likely to kickstart the long process of getting mortgage rates back to a place where sellers are incentivized to sell and buyers are able to afford homes. But that will all be the end result of a lengthy chain reaction that the Federal Reserve has not yet set into motion.

Fortunately for homebuyers, not all markets are equal. While first-time homebuyers anxiously wait for rates to drop, there are plenty of options for markets that offer a great bang for your buck.

Real estate company Zillow recently published its list of the best markets for starter homes. The firm used several metrics to determine these top housing markets, including rent prices, inventory of affordable houses, inventory relative to renting households and density of households aged 29-42.

Here are the 10 markets for first-time homebuyers in 2024, ranked by Zillow in order of their aggregate scores:

1. St. Louis, Missouri
2. Detroit, Michigan
3. Minneapolis, Minnesota
4. Indianapolis, Indiana
5. Austin, Texas
6. Pittsburgh, Pennsylvania
7. San Antonio, Texas
8. Birmingham, Alabama
9. Kansas City, Missouri
10. Baltimore, Maryland

In a blog post, Zillow explained that the data points allowed it to rank markets based on how easy it is to navigate the buying process. Markets with low rent, for instance, help buyers save up for a down payment more quickly; the inventory metrics identify markets with a higher number of active, affordable listings and areas with more listings per renter household, providing more options; and the age metric measures the portion of households whose owners fall within Zillow's "homebuying age" of 29-42. A higher density of younger homeowners would suggest a higher success rate for first-time buyers.

In sum, this means that buyers should theoretically have more buying power in these cities than anywhere else in the country.

It's worth noting that Zillow's list focuses on large, urban areas rather than suburbs. In January, Realtor.com published its own list of the best markets for first-time homebuyers; it highlights mostly suburban towns. However, there are similarities between the two, like the inclusion of many Midwestern and Southern markets and a lack of West Coast towns.

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