Best and Worst Places Ranking for First-Time Homebuyers

Mortgage News March 15, 2023

According to the 2023 Bankrate Best Metros for First-Time Homebuyers study, Austin, Texas, is the most attractive place for first-time homebuyers. Bankrate ranked 50 metro areas across four categories: housing prices in relation to local wages, the tightness of the local housing market, the employment picture, and wellness and culture. The report found that Austin, Texas, offers a combination of affordable homes, strong local economies, and housing markets that aren’t too bubbly, making it the most attractive place for first-time homebuyers.

The increasing prosperity of the metropolitan area is evidenced by the substantial rise in home prices, which have more than doubled in the past ten years, surpassing the growth in wages. Still, the housing market has favored buyers over the past year, as illustrated by Austin’s No. 2 ranking in market tightness.

At the bottom of the ranking are five metro areas with steep home prices and tight housing markets: Riverside, San Diego, New York City, Boston, and Washington, D.C. Based on the report, Washington, D.C., is the least attractive metro area, followed by two Northeast metro areas and two Southern California metros.

Matt Smith, 35, can attest to the shift in Austin’s housing market. He moved to Austin from New York City in 2019 and began shopping for a condo during the pandemic. However, he quickly encountered the reality of an intense seller’s market where his bid was just one of 20 offers on a single unit. In 2022, as Austin’s housing market cooled, Smith resumed his search and closed on a one-bedroom condo in downtown Austin. Despite facing rising mortgage rates and substantial student loans, he was still able to afford to become a homeowner in Austin.

Over the past few years, Austin has attracted major tech companies such as Apple, Amazon, Google, and others, in addition to being the home of the University of Texas and a lively music scene. The median family income in 2022 for Austin was $110,300, representing a 45% increase compared to ten years prior. Smith, who had grown weary of eye-watering home prices, frigid winters, and high taxes in New York City, appreciates Austin’s relatively low property tax rate and the lack of a state income tax.

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