2017’s Best & Worst Places for First-Time Home Buyers

07/17/2017

Richie Bernardo | Senior Writer

Buying a home for the first time is an exciting and important milestone for many Americans. As such, first-time home buyers must carefully consider a number of factors — what they want and need relative to what they can afford, for instance — before diving to the deep end of real estate.

Often, potential buyers begin searching for their dream homes and drafting their wish lists without a realistic idea of market prices, interest rates or even their eligibility to obtain a mortgage.

To simplify the process, WalletHub’s analysts compared 300 cities of varying sizes across 23 key indicators of market attractiveness, affordability and quality of life. Our data set ranges from cost of living to real-estate taxes to property-crime rate. Read on for our findings, valuable insight from a panel of experts and a full description of our methodology.

Main Findings

11300


 

Best Places for First-Time Home Buyers

Overall Rank (1 = Best)CityTotal Score'Affordability' Rank'Real-Estate Market' Rank'Quality of Life' Rank
1 McKinney, TX 68.32 191 1 7
2 Frisco, TX 68.2 175 2 5
3 Allen, TX 68.15 151 6 3
4 Cary, NC 67.98 29 19 46
5 Norman, OK 67.64 83 14 34
6 Lincoln, NE 66.61 88 44 19
7 Richardson, TX 66.32 179 5 12
8 Boise, ID 66.26 2 139 37
9 Thornton, CO 66.04 122 21 10
10 Murfreesboro, TN 65.97 60 10 121
11 Denton, TX 65.83 205 4 9
12 Greeley, CO 65.63 98 30 14
13 Gilbert, AZ 65.37 7 17 152
14 Charleston, SC 65.33 116 3 107
15 Grand Rapids, MI 65.17 21 18 171
16 Overland Park, KS 64.8 150 41 17
17 Arvada, CO 64.63 142 25 18
18 Carrollton, TX 64.59 171 15 15
19 Fort Wayne, IN 64.56 18 36 88
20 Peoria, AZ 64.47 20 27 157
21 Grand Prairie, TX 64.38 173 38 2
22 Chandler, AZ 64.24 16 49 101
23 Raleigh, NC 64.19 58 45 71
24 Spokane Valley, WA 64.01 52 29 148
25 Lexington, KY 63.99 27 57 90
26 Fort Collins, CO 63.96 167 23 6
27 Cedar Rapids, IA 63.78 17 184 27
28 Colorado Springs, CO 63.54 74 43 87
29 Plano, TX 63.36 176 33 24
30 Green Bay, WI 63.36 45 172 8
Show All

Artwork-2017-Best-Cities-for-First-Time-Home-Buyers

 

Rankings by City Size

Rank (1= Best)

Large Cities (Score)

Rank (1= Best)

Midsize Cities (Score)

Rank (1= Best)

Small Cities (Score)

1 Raleigh, NC 
(64.19)
1 McKinney, TX 
(68.32)
1 Frisco, TX 
(68.20)
2 Lexington, KY 
(63.99)
2 Cary, NC 
(67.98)
2 Allen, TX 
(68.15)
3 Colorado Springs, CO 
(63.54)
3 Lincoln, NE 
(66.61)
3 Norman, OK 
(67.64)
4 Tampa, FL 
(63.24)
4 Boise, ID 
(66.26)
4 Richardson, TX 
(66.32)
5 Fort Worth, TX 
(63.15)
5 Gilbert, AZ 
(65.37)
5 Thornton, CO 
(66.04)
6 Omaha, NE 
(62.93)
6 Grand Rapids, MI 
(65.17)
6 Murfreesboro, TN 
(65.97)
7 El Paso, TX 
(62.77)
7 Overland Park, KS 
(64.80)
7 Denton, TX 
(65.83)
8 Nashville, TN 
(62.30)
8 Fort Wayne, IN 
(64.56)
8 Greeley, CO 
(65.63)
9 Oklahoma City, OK 
(61.98)
9 Peoria, AZ 
(64.47)
9 Charleston, SC 
(65.33)
10 Denver, CO 
(61.66)
10 Grand Prairie, TX 
(64.38)
10 Arvada, CO 
(64.63)
11 Louisville, KY 
(61.55)
11 Chandler, AZ 
(64.24)
11 Carrollton, TX 
(64.59)
12 Pittsburgh, PA 
(61.30)
12 Fort Collins, CO 
(63.96)
12 Spokane Valley, WA 
(64.01)
13 Minneapolis, MN 
(60.69)
13 Plano, TX 
(63.36)
13 Cedar Rapids, IA 
(63.78)
14 Atlanta, GA 
(60.64)
14 Henderson, NV 
(63.19)
14 Green Bay, WI 
(63.36)
15 Charlotte, NC 
(60.40)
15 Madison, WI 
(62.77)
15 Centennial, CO 
(62.77)
16 Aurora, CO 
(60.23)
16 Salt Lake City, UT 
(61.87)
16 Surprise, AZ 
(62.72)
17 Mesa, AZ 
(60.08)
17 Garland, TX 
(61.79)
17 Roanoke, VA 
(62.32)
18 Columbus, OH 
(60.03)
18 Amarillo, TX 
(61.53)
18 Davenport, IA 
(62.27)
19 Austin, TX 
(59.50)
19 Richmond, VA 
(61.41)
19 Yakima, WA 
(62.04)
20 Phoenix, AZ 
(59.06)
20 Scottsdale, AZ 
(61.34)
20 Westminster, CO 
(61.78)
21 Arlington, TX 
(59.02)
21 Orlando, FL 
(60.61)
21 Broken Arrow, OK 
(61.71)
22 Las Vegas, NV 
(58.63)
22 Durham, NC 
(60.59)
22 Kenosha, WI 
(61.59)
23 Jacksonville, FL 
(58.11)
23 Port St. Lucie, FL 
(60.50)
23 Livonia, MI 
(61.11)
24 Tulsa, OK 
(58.07)
24 Augusta, GA 
(60.36)
24 Roseville, CA 
(61.08)
25 Virginia Beach, VA 
(58.05)
25 St. Paul, MN 
(60.19)
T-25 Pueblo, CO 
(61.04)
26 Dallas, TX 
(57.58)
26 St. Petersburg, FL 
(60.19)
T-25 Sterling Heights, MI 
(61.04)
27 San Antonio, TX 
(56.59)
27 Huntsville, AL 
(59.77)
27 Joliet, IL 
(60.98)
28 Tucson, AZ 
(56.43)
28 Columbus, GA 
(59.69)
28 Longmont, CO 
(60.78)
29 Sacramento, CA 
(55.90)
29 Chesapeake, VA 
(59.58)
29 Roswell, GA 
(60.70)
30 Bakersfield, CA 
(55.71)
30 Cape Coral, FL 
(59.54)
30 Hampton, VA 
(60.60)
31 Kansas City, MO 
(55.68)
31 Glendale, AZ 
(59.32)
31 Wilmington, NC 
(60.58)
32 Milwaukee, WI 
(54.95)
32 Tempe, AZ 
(59.20)
32 Boca Raton, FL 
(60.50)
33 Corpus Christi, TX 
(54.58)
33 Winston-Salem, NC 
(59.19)
33 Mesquite, TX 
(60.24)
34 Philadelphia, PA 
(54.35)
34 Des Moines, IA 
(59.10)
34 Peoria, IL 
(60.10)
35 St. Louis, MO 
(54.32)
35 Laredo, TX 
(59.07)
35 Warren, MI 
(60.06)
36 Indianapolis, IN 
(54.25)
36 Irving, TX 
(58.93)
36 Manchester, NH 
(59.82)
37 Seattle, WA 
(53.91)
37 Newport News, VA 
(58.55)
37 Naperville, IL 
(59.77)
38 Cleveland, OH 
(53.63)
38 Vancouver, WA 
(58.42)
38 Dearborn, MI 
(59.47)
39 Memphis, TN 
(53.52)
39 Knoxville, TN 
(58.28)
39 Palm Bay, FL 
(59.45)
40 Houston, TX 
(53.36)
40 Spokane, WA 
(58.17)
40 Fort Smith, AR 
(59.21)
41 Wichita, KS 
(53.03)
41 Akron, OH 
(58.08)
41 Springfield, IL 
(58.96)
42 Riverside, CA 
(52.50)
42 Cincinnati, OH 
(57.91)
42 Erie, PA 
(58.95)
43 Portland, OR 
(52.35)
43 Norfolk, VA 
(57.73)
43 Portsmouth, VA 
(58.84)
44 Fresno, CA 
(52.22)
44 Elk Grove, CA 
(57.32)
44 Bellevue, WA 
(58.82)
45 Chicago, IL 
(51.94)
45 Pembroke Pines, FL 
(57.27)
45 Lakewood, CO 
(58.66)
46 San Diego, CA 
(51.14)
46 North Las Vegas, NV 
(57.08)
46 Clearwater, FL 
(58.65)
47 Detroit, MI 
(50.51)
47 Greensboro, NC 
(56.44)
47 North Charleston, SC 
(58.64)
48 Albuquerque, NM 
(50.42)
48 Reno, NV 
(56.32)
48 Savannah, GA 
(58.26)
49 Baltimore, MD 
(49.98)
49 Buffalo, NY 
(56.31)
49 Clovis, CA 
(58.00)
50 New Orleans, LA 
(47.71)
50 Aurora, IL 
(56.12)
50 Vacaville, CA 
(57.93)
51 Anaheim, CA 
(47.16)
51 Little Rock, AR 
(55.09)
51 Renton, WA 
(57.76)
52 San Jose, CA 
(46.87)
52 Springfield, MA 
(54.95)
52 Elgin, IL 
(57.53)
53 Honolulu, HI 
(46.34)
53 Tacoma, WA 
(54.90)
53 Sunrise, FL 
(57.48)
54 Santa Ana, CA 
(45.57)
54 Rancho Cucamonga, CA 
(54.51)
54 Visalia, CA 
(57.35)
55 Boston, MA 
(44.81)
55 Toledo, OH 
(54.38)
55 Tuscaloosa, AL 
(57.29)
56 Washington, DC 
(43.55)
56 Montgomery, AL 
(54.10)
56 High Point, NC 
(57.25)
57 Long Beach, CA 
(43.05)
57 Lancaster, CA 
(53.97)
57 Yuma, AZ 
(57.03)
58 Miami, FL 
(42.47)
58 Salem, OR 
(53.77)
58 Alexandria, VA 
(57.00)
59 Los Angeles, CA 
(42.15)
59 Mobile, AL 
(53.61)
59 Hillsboro, OR 
(56.77)
60 New York, NY 
(40.27)
60 Moreno Valley, CA 
(53.37)
60 Victorville, CA 
(56.73)
61 San Francisco, CA 
(39.01)
61 Fayetteville, NC 
(53.37)
61 Sandy Springs, GA 
(56.72)
62 Oakland, CA 
(37.48)
62 Fontana, CA 
(53.05)
62 Lakeland, FL 
(56.70)
63 Jersey City, NJ 
(52.97)
63 Athens-Clarke, GA 
(56.62)
64 Irvine, CA 
(52.89)
64 Murrieta, CA 
(56.52)
65 Worcester, MA 
(52.34)
65 Dayton, OH 
(56.42)
66 Ontario, CA 
(52.22)
66 Allentown, PA 
(56.22)
67 Jackson, MS 
(52.15)
67 Davie, FL 
(55.79)
68 Eugene, OR 
(52.00)
68 Waukegan, IL 
(55.61)
69 Rockford, IL 
(51.80)
69 Fairfield, CA 
(55.47)
70 Springfield, MO 
(51.78)
70 Temecula, CA 
(55.44)
71 Birmingham, AL 
(51.48)
71 Plantation, FL 
(55.31)
72 Palmdale, CA 
(51.46)
72 Kent, WA 
(55.28)
73 Stockton, CA 
(51.43)
73 Everett, WA 
(54.89)
74 Modesto, CA 
(51.25)
74 Miramar, FL 
(54.61)
75 Providence, RI 
(50.94)
75 Ann Arbor, MI 
(54.60)
76 Corona, CA 
(50.92)
76 Chico, CA 
(54.41)
77 Rochester, NY 
(50.32)
77 Gainesville, FL 
(54.32)
78 Santa Rosa, CA 
(49.49)
78 Rialto, CA 
(54.05)
79 Baton Rouge, LA 
(49.44)
79 Lowell, MA 
(53.91)
80 Tallahassee, FL 
(49.43)
80 Waterbury, CT 
(53.84)
81 Fort Lauderdale, FL 
(49.24)
81 Stamford, CT 
(53.69)
82 Santa Clarita, CA 
(49.04)
82 Lansing, MI 
(53.65)
83 Shreveport, LA 
(48.97)
83 West Palm Beach, FL 
(53.57)
84 San Bernardino, CA 
(48.91)
84 New Haven, CT 
(53.55)
85 Hayward, CA 
(48.82)
85 Hollywood, FL 
(53.47)
86 Hialeah, FL 
(48.75)
86 Federal Way, WA 
(53.10)
87 Oxnard, CA 
(48.56)
87 Coral Springs, FL 
(53.10)
88 Chula Vista, CA 
(48.53)
88 New Bedford, MA 
(52.87)
89 Oceanside, CA 
(47.45)
89 Pompano Beach, FL 
(52.65)
90 Pomona, CA 
(46.92)
90 Hartford, CT 
(52.42)
91 Garden Grove, CA 
(46.59)
91 Santa Maria, CA 
(51.95)
92 Salinas, CA 
(46.46)
92 Albany, NY 
(51.49)
93 Huntington Beach, CA 
(46.33)
93 Flint, MI 
(51.43)
94 Fremont, CA 
(46.13)
94 Bridgeport, CT 
(51.29)
95 Yonkers, NY 
(45.43)
95 Miami Gardens, FL 
(51.18)
96 Anchorage, AK 
(45.11)
96 Beaverton, OR 
(51.14)
97 Glendale, CA 
(41.21)
97 Antioch, CA 
(50.95)
98 Newark, NJ 
(39.30)
98 Vallejo, CA 
(50.93)
99 Fall River, MA 
(50.66)
100 Thousand Oaks, CA 
(50.64)
101 Mission Viejo, CA 
(50.56)
102 Simi Valley, CA 
(50.53)
103 Quincy, MA 
(50.37)
104 Gresham, OR 
(49.57)
105 Boulder, CO 
(49.45)
106 Carlsbad, CA 
(49.39)
107 Escondido, CA 
(48.88)
108 Concord, CA 
(48.60)
109 Lynn, MA 
(48.38)
110 Richmond, CA 
(47.96)
111 Orange, CA 
(47.95)
112 Norwalk, CA 
(47.71)
113 Ventura, CA 
(47.56)
114 Vista, CA 
(47.39)
115 Carson, CA 
(47.09)
116 West Covina, CA 
(47.01)
117 Fullerton, CA 
(47.00)
118 Cambridge, MA 
(46.94)
119 El Cajon, CA 
(46.82)
120 Elizabeth, NJ 
(46.71)
121 Compton, CA 
(46.54)
122 Burbank, CA 
(46.39)
123 Santa Clara, CA 
(46.37)
124 Downey, CA 
(46.20)
125 Brockton, MA 
(45.42)
126 Pasadena, CA 
(45.41)
127 Paterson, NJ 
(45.12)
128 Costa Mesa, CA 
(45.06)
129 South Gate, CA 
(44.97)
130 Sunnyvale, CA 
(44.73)
131 Torrance, CA 
(43.73)
132 Inglewood, CA 
(42.61)
133 Westminster, CA 
(41.47)
134 Daly City, CA 
(41.29)
135 El Monte, CA 
(41.06)
136 San Mateo, CA 
(39.91)
137 Miami Beach, FL 
(37.95)
138 Santa Monica, CA 
(37.52)
139 Berkeley, CA 
(36.29)
140 Santa Barbara, CA 
(36.22)

 

Ask the Experts

Purchasing real estate for the first time can be a daunting experience for many consumers. But it doesn’t have to be. For advice and insight, we asked a panel of experts to share their thoughts on the following key questions:

  1. What should first-time home buyers consider when choosing a neighborhood
  2. How do you know that you are financially ready to buy your first home?
  3. What do you recommend as the minimum down payment for a first-time home buyer?
  4. What effect did Trump’s Executive Order increasing the cost of FHA-backed loans have on first-time home buyers?
  5. How can federal, state and local policymakers responsibly and effectively increase home affordability, particularly for first-time home buyers?
Back to All Experts

Alessandro Rebucci

Assistant Professor of Economics, Finance and Real Estate at Johns Hopkins Carey Business School
Alessandro Rebucci
What should first-time home buyers consider when choosing a neighborhood? 

The old adage says “location,” “location,” “location.” What that means nowadays is proximity to urban areas where health, education, and other services are easily accessible, with short commutes, and plenty of labor demand. Properties (and especially apartments) with these characteristics are likely to be more liquid investments (easily resalable), and appreciate or preserve more values over the next several years. The millions of millennials who are shaping the market have developed a taste for these types of housing solutions, and will provide strong support to these markets for years to come. 

How do you know that you are financially ready to buy your first home? 

Job security is important to be able to service a mortgage smoothly. That means the confidence that rain or shine, a well-paid job can be easily found. If you are struggling to find employment, homeownership is not yet for you, and might be the rope around your neck if somehow acquired through lax underwriting or easy loans at the top of the credit cycle. In general, comparing cost of renting with cost of owning is a good disciplining exercise. If owning is cheaper than renting and the differential can be locked in for a few years, don’t miss out on the opportunity to start building some equity and wealth. 

What do you recommend as the minimum down payment for a first-time home buyer? 

It depends. I bought my first apartment in D.C. 20 years ago, with $7,000. It was an FHA-approved property and I was supposed to put 5% percent down, but they made a mistake and I ended up putting only 3% down, and got some cash back at closing. I used the capital gain from that first apartment to buy a small house when my children were born. Were it not for the FHA loan with 5% down, I would not have become a homeowner until much later. But I entered the market at the very bottom of the cycle and I knew it. To be safe, 20% is a good margin. We are not going to see prices dropping by more than that in a few years, like during the last crisis, anytime soon again. 

What effect did Trump’s Executive Order increasing the cost of FHA-backed loans have on first-time homebuyers? 

As my story above illustrates, it did not help. The GSEs face a number of problems, and the U.S. system of housing finance is in need of reform, including cutting back on a number of generous subsidies. But I am not sure that can be achieved or even started with a piecemeal approach, targeting this or that specific spot in the system. 

How can federal, state and local policymakers responsibly and effectively increase home affordability, particularly for first time homebuyers? 

If you are in the formal job market, homeownership is accessible and affordable in the U.S. What in my opinion was lost over the past couple of decades is equal opportunity of employability across segment of the income, and wealth distribution. Or, to put it differently, we have an issue of access to education, not access to the housing market. Good education leads to good access to the labor market, and that brings with it access to the housing and health insurance market. It is education, from child care to higher education, where the U.S. is in need of a serious rethinking of its public policies.Lou Tisler
Back to All Experts

Lou Tisler

Director of the Housing Counseling Network at The National Community Reinvestment Coalition
Lou Tisler
What should first-time home buyers consider when choosing a neighborhood? 

Transportation costs -- many first-time homebuyers are looking at utility costs, taxes, insurance, but few take into account transportation costs, either to and from work, or within the neighborhood. Though gas prices are low, these still add up on a weekly, monthly, yearly basis. 

How do you know that you are financially ready to buy your first home? 

The best way to avoid the pitfalls of homeownership is to be an educated buyer. Free or low costs, home buyer education is available throughout the United States. Reading a website is a good start, but fully immersing yourself in what it means to be a homeowner, what is negotiable on the mortgage statement, what will break down first and how much will it cost, what to do if you fall behind, all these are answered through housing counseling. You can find an agency near you here. 

What do you recommend as the minimum down payment for a first-time home buyer? 

3.5% down when closing the loan; 3.5% in the bank for emergency purposes. 

What effect did Trump’s Executive Order increasing the cost of FHA-backed loans have on first-time homebuyers? 

Since more low to moderate income homeowners are purchasing using FHA, an increase of $250 per $100,000 home purchased is passed onto low to moderate income homebuyers. 

How can federal, state and local policymakers responsibly and effectively increase home affordability, particularly for first time homebuyers? 

Many local governments and schools are funded on property taxes; if the federal and state governments continue to trim their budgets on the backs of local municipalities’ budgets, property taxes will continue to be on the ballot, and will continue to increase. The most cost-effective way to make homeownership affordable is to make property taxes affordable; whether for a first-time home buying millennial or a soon to be, fixed income retiree.

Methodology

To determine the most favorable housing markets for first-time home buyers, WalletHub’s analysts compared a sample of 300 U.S. cities (varying in size) across three key dimensions: 1) Affordability, 2) Real-Estate Market and 3) Quality of Life.

We evaluated those dimensions using 23 relevant metrics, which are listed below with their corresponding weights. Each metric was graded on a 100-point scale, with a score of 100 representing the most favorable conditions for first-time home buyers. Data for metrics marked with an asterisk (*) were available at the state level only.

Finally, we determined each city’s weighted average across all metrics to calculate its total score then used the resulting scores to rank-order our sample. Our sample considers only the city proper in each case and excludes cities in the surrounding metro area. Each city was categorized according to the following population-size guidelines:

  • Large cities: More than 300,000 people
  • Midsize cities: 150,000 to 300,000 people
  • Small cities: Fewer than 150,000 people

Affordability – Total Points: 33.33

  • Housing Affordability: Triple Weight (~14.29 Points)
    Note: This metric was calculated as follows: Median House Price / Median Annual Household Income.
  • Average Cost of Homeowner’s Insurance: Full* Weight (~4.76 Points)
  • Cost of Living: Full Weight (~4.76 Points)
  • Cost per Square Foot: Full Weight (~4.76 Points)
    Note: This metric measures specifically the median list price per average home square footage.
  • Real-Estate Tax Rate: Full Weight (~4.76 Points)

Real-Estate Market – Total Points: 33.33

  • Rent-to-Price-Ratio: Double Weight (~6.06 Points)
  • Housing-Market Health Index: Full Weight (~3.03 Points)
  • Share of Homes Sold in One Year: Full Weight (~3.03 Points)
  • Median Home-Price Appreciation: Double Weight (~6.06 Points)
  • Foreclosure Rate: Full Weight (~3.03 Points)
  • Buy vs. Rent Breakeven Horizon: Full Weight (~3.03 Points)
    Note: The “breakeven horizon” is defined by Zillow as the point, in years, at which buying a home becomes less expensive than renting the same home.
  • Share of Listings with Price Cuts: Full Weight (~3.03 Points)
  • Share of Housing Units Built between 2010 and 2015: Full Weight (~3.03 Points)
  • Building-Permit Activity: Full Weight (~3.03 Points)
    Note: This metric measures the number of unit permits pulled per 1,000 residents.

Quality of Life – Total Points: 33.33

 
Sources: Data used to create this ranking were collected from the U.S. Census Bureau, Council for Community and Economic Research, Zillow, Federal Bureau of Investigation, Insurance Information Institute, AreaVibes, Renwood RealtyTrac and WalletHub research.

 
 
To read this article on WalletHub's website, click here
connect with us