A new WalletHub report ranked 300 U.S. cities to determine the best and worst places for first-time homebuyers, using 22 indicators across affordability, real estate market conditions, and quality of life. The report highlights significant regional disparities in housing accessibility.
Top 10 Cities for First-Time Homebuyers
The report identified Palm Bay, Florida, as the best city for first-time homebuyers, followed by Surprise, Arizona, and Gilbert, Arizona. Florida and Arizona dominated the top 10, with eight of the 10 cities located in these two states. Other top-ranked cities included Tampa, Florida (No. 4), Yuma, Arizona (No. 5), and Boise, Idaho (No. 7).
Worst Cities for First-Time Homebuyers
Berkeley, California, ranked as the worst city for first-time homebuyers, with nine of the 10 worst-ranked cities located in California. Anchorage, Alaska, was the only non-California city in the bottom 10. The ranking evaluated factors such as housing costs, taxes, crime rates, and home appreciation.
Market Challenges for First-Time Buyers
The National Association of Realtors (NAR) reported that first-time buyers now make up just 21% of the market, the lowest share since NAR began tracking in 1981. Before 2008, they consistently accounted for about 40% of home sales. Rising home prices and mortgage rates have made it increasingly difficult for first-time buyers to enter the market.
Methodology and Key Metrics
WalletHub compared 300 cities using metrics such as market attractiveness, affordability, and quality of life. The report considered factors like cost of living, real estate taxes, crime rates, active listings, building permit activity, home appreciation, and millennial homeownership. The data was used to determine the best and worst cities for first-time homebuyers in 2024.
Florida's Strong Performance
Florida fared well in the ranking, with 26 cities listed among the best places for first-time homebuyers. In addition to Palm Bay, Tampa (No. 4), and Orlando (No. 9), other Florida cities in the top 50 included Cape Coral (No. 11), Boca Raton (No. 19), and Lakeland (No. 21).
California's Struggles
California cities faced significant challenges, with Berkeley ranking last at 300th out of 300. The state's high housing costs, real estate taxes, and market conditions contributed to its poor performance. The report noted that the lowest-ranked cities tend to combine several challenges that make buying a first home particularly difficult.
National Trends and Implications
The report highlights a growing housing affordability crisis, with first-time buyers facing record-low market share. The average 30-year fixed mortgage rate was 6.49% as of July 9, up from 6.43% the week before, according to Freddie Mac. This trend underscores the need for policy interventions to address housing affordability and market accessibility for first-time buyers.