The City With the Best Market for First-Time Homebuyers

If you’re looking to buy your first home, it may surprise you to learn where you’ll find the best market—research shows that you’ll probably have the best luck in Orlando, Florida.

According to a recent Zillow report, Orlando tops the list—followed by Tampa, Indianapolis, Las Vegas, and San Antonio. San Francisco, perhaps unsurprisingly, was found to have the worst market in comparison, followed by San Jose, Los Angeles, San Diego and Portland, Oregon.

New York, on the other hand, didn’t actually make it into the bottom 10—though it did come close, coming in just above Baltimore, Sacramento and Seattle.

Zillow ranked the cities based on 5 key metrics:

  • Lower median home value for a more affordable down payment
  • Strong home value forecast as an indicator of building equity
  • Higher inventory-to-household ratio to capture available supply
  • Shorter Breakeven Horizon to show a financial advantage of buying over renting
  • Greater share of listings with price cuts to indicate a less competitive market

For first-time homebuyers, the biggest barrier to homeownership is usually the cost of the down payment, so it makes sense that in all but 3 of the 10 cities found to have the best markets, the median home value is lower than the national median—the lower the home price, the lower the down payment.

While the Bay Area has stronger job markets, there’s a low inventory of homes (meaning way more competition) and the prices are higher, which is why first-time homebuyers will have a harder time finding and purchasing a home there than anywhere else. According to Zillow, a 5 percent down payment in the Bay Area is actually larger than a 20 percent down payment in most of the cities found to have the best markets—clearly a huge difference.

Of course, that doesn’t mean you won’t be able to find a home if you don’t look in Orlando or Indianapolis—it just means you’ll probably have more luck there, especially if you’re on a budget.

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