When will the real estate market be kind to first-time home buyers?
Home prices are higher than ever, forming an increasingly exclusive real estate market. Mortgage rates, too, have shot up. Yet there are glimmers of hope in 2023. But where? For first-time buyers, the chances of breaking into the market depends a lot on where they look.
Here, we look at the cities the National Association of REALTORS® has pinpointed as the Realtor.com Top 10 Markets. We’ll explore the reasons for their high rankings. And we’ll add a little more about what first-time buyers should know.
Zeroing in on the Top Five
Realtor.com compared cities nationwide to pick out the most appealing markets for first-time home buyers in 2023. The criteria? A healthy supply of fairly priced homes for sale; young buyers moving in; growing employment opportunities in accessible, local job markets; plenty of places to eat and drink; and higher-than average property value forecasts. In short, the top five picks have a bundle of basic traits that tend to appeal to first-timers in the real estate market.
Zeroing in on the best overall packages of positive attributes, Realtor.com featured these cities as its top five markets:
- Portsmouth, Virginia (near Norfolk — part of the Hampton Roads metro area).
- DeForest, Wisconsin (part of the Madison metro area).
- Windsor Locks, Connecticut (in the Hartford metro area and home to the Bradley International Airport).
- Gloucester City, New Jersey (in Camden County, just over the Delaware River from Philadelphia).
- Moore, Oklahoma (part of the Oklahoma City metro area).
Five more cities on the list fill out the top ten. The additional five are Magna, Utah (near Salt Lake City); Somersworth, New Hampshire (in the Greater Boston-Cambridge area); and three New York cities: Eggertsville (near Buffalo), Watervliet (near the capital city of Albany), and Mattydale (in the Syracuse area).
All of these top ten cities have estimated commute times under the national average — which, according to Realtor.com, means under 30 minutes. So, what else makes these cities worth a look for budding homeowners? Lets look at some of these cities’ most notable characteristics.
Pros and Cons of Realtor.com’s Picks
First-time buyers tend to look for homes in areas with plenty of gathering spots such as markets, restaurants, and bars. Of the top ten picks, the strongest cities on that count are Somersworth, New Hampshire; Watervliet, New York; and Windsor Locks, Connecticut.
But where can a new buyer find a decent selection of listings? Where can a first-timer succeed, and not be knocked out by overwhelming competition? Out of the group, the highest selection of homes on the market (at the time of this writing) appear in Magna, Utah and Gloucester City, New Jersey.
Gloucester City and Mattydale in New York have the most affordable overall markets of the group. Some of the most promising job markets are located in Somersworth, Magna, Utah, and DeForest, Wisconsin. Notably, Magna, which is near Salt Lake City, has a projected jobless rate of just 2.4%.
As for forecasts for growth in property values, Realtor.com’s top ten do vary. Somersworth, New Hampshire could be an especially good pick for equity building. According to the study, it’s projected to have robust real estate sales growth.
☛ To build wealth through home equity, buyers try to choose areas where property values will rise.
While the property values in Portsmouth, Virginia, Watervliet, New York, and Moore, Oklahoma are not forecast to decrease in 2023, they could see a lower rate of property value growth than the U.S. average. (We should probably also note that Moore is located in “Tornado Alley.” In general, the Oklahoma City area has quite a remarkable history of twisters.)
Pittsburgh, PA and the State of Rhode Island: Actively Boosting First-Time Buyers
First-time buyers would be wise to note where they’re being actively sought out and supported, too. Consider Pittsburgh, Pennsylvania. A new initiative called OwnPGH is designed to help mortgage applicants with modest incomes buy houses or condos to live in. The program reaches out to single buyers earning anywhere up to $47,500 and couples who make up to $54,300. The income ceilings are higher for applicants with larger households. OwnPGH applicants — first-timers or those who’ve not owned their own homes for at least three years — may request grant funding up to $50K. Additionally, the Housing Authority of the City of Pittsburgh (HACP) is offering up to $40,000 in matching funds to approved OwnPGH grant applicants.
All told, Pittsburgh home buyers can get up to $90,000 in support. Find out more about the various ways Pittsburgh’s OwnPGH can assist first-timers who’d like to buy houses or condos.
Meanwhile, there’s a $17,500 grant for first-time homebuyers in Rhode Island. This statewide down payment support initiative is available thanks to Rhode Island’s decision to tap American Rescue Plan Act funds for the purpose. The assistance is immediately forgivable. In all other aspects, regular mortgage application standards apply.
This new plan to support home buyers of modest means will be crucial for home seekers who choose Rhode Island as a place to put down roots.
In Any Market, 2023 Brings Its Own Set of Realities
In early 2023, the median price for an existing home is approaching $360K. Property values have surged since the pre-pandemic years. In 2019, the median home price was $258K. People considered that price high at the time.
The relatively good news is this. Today’s listings average about one month on the market before selling. The more days a home lingers on the market, the better a buyer’s chances of nabbing it at a discount from the original listing price. This makes the market more appealing to first-time buyers, who now comprise close to a third of home buyers.
So, while buying is still no easy feat, 2023 has brought improved buying opportunities. A year ago, first-timers made up a little over a fourth of the buying population. Their numbers were so low because it was hard for first-timers to compete with cash buyers.
Mortgage rates are projected to come down in 2024. This is based on the assumption that the U.S. Federal Reserve will end its current rate-hiking course. If so, mortgage rates are likely to stay above 6% most of 2023, possible dropping down again in 2024. For hopeful buyers, that means saving up could be rewarded in the months to come.
Of course, that’s a prediction. In this wild real estate market, it’s hard to find any sure bets.
Supporting References
Lucia Mutikani for Reuters.com: U.S. Home Sales Post 12th Straight Monthly drop; House Price Inflation Slows (Feb. 21, 2023).
Danielle Hale and Sabrina Speianu for Realtor.com: The Best Markets for First-Time Homebuyers in 2023 (Jan. 18, 2023; citing Claritas estimates based on U.S. Census Bureau data; Moody’s Analytics projections based on U.S. Bureau of Labor Statistics data; 2020 County Business Patterns data; 2023 sales and price forecasts from Realtor.com®).
Jeremy Tanner for TheHill.com (from Nexstar Media, Inc.): These Housing Markets Could Be a First-Time Buyer’s Best Bet in 2023 (Jan. 25, 2023).
Paul Centopani for The Mortgage Reports: Top Housing Markets for First-Time Home Buyers in 2023 (Jan. 30, 2023).
And as linked.
Photo credits: Alex Azabache and MV Vacation, via Pexels.