For First-Time Home Buyers, Some Markets Show Potential

First-time home buyers can find some remarkable homes—provided they stay away from the East and West coasts, said Zillow, Seattle.

In reality, one has to go to practically the geographical center of the continuous 48 states—Wichita, Kan.—to find the best mix of home affordably and selection, the Zillow analysis found. Six metros in the Midwest, including in Kansas, Ohio, Michigan and Missouri, rank among the top 10 best metros for first-time buyers in 2023.

First-time buyers now represent 45% of all buyers, up from 37% last year and in line with the pre-pandemic share. With higher interest rates and rising home prices, Zillow said these locations offer the best values, and are seeing a higher share of price cuts.

Zillow ranked U.S. metros based on factors that included mortgage and rent affordability for first-time home buyers, available homes for sale and the share of listings with a price cut.

“Although housing affordability is extremely challenging these days, some markets will be more hospitable than others for first-time home buyers,” said Zillow senior economist Orphe Divounguy. “These metros are potential hotbeds for those looking to buy their first home. Not only will shoppers find more affordable monthly mortgage costs and have an easier time qualifying for a smaller loan, but rent also is more affordable than elsewhere in the country, shortening the time it takes to save for a down payment.”

Top 10 best metros for first-time home buyers

1.         Wichita, Kan.

2.         Toledo, Ohio

3.         Syracuse, N.Y.

4.         Akron, Ohio

5.         Cleveland, Ohio

6.         Tulsa, Okla.

7.         Detroit

8.         Pittsburgh

9.         St. Louis

10.       Little Rock, Ark.

Wichita, the largest metro in Kansas, landed the top spot largely because of its relative affordability — it’s among the top metros where people spend the smallest share of their income on rent and mortgage costs. And it has a higher share of for-sale listings relative to active shoppers, which means more options and bargaining power for potential home buyers. Wichita home shoppers can also find a number of deals popping up, with 22% of listings seeing a price cut in October.

Wichita rose to the top for similar reasons earlier this year when Zillow analyzed the best metros for single renters. Areas with more affordable housing, such as in the Midwest and Great Lakes regions, should see relatively healthier markets and stronger sales in 2023 when compared to other U.S. markets.

“Affordability remains the No. 1 challenge for first-time home buyers,” said Amanda Pendleton, Zillow home trends analyst. “If they can overcome that significant hurdle, aspiring buyers have a better chance of landing a home than they’ve had in several years. They have more options, more time to decide and more negotiating power, meaning they may be able to land their dream home at a discount.”