Source: Realtor.com —
The housing market has been brutal for first-time homebuyers. And now, just as prices are finally beginning to slacken and the bidding wars are dying down, higher mortgage interest rates have turned the prospect of homeownership into a financial impossibility for many.
However, there are still places where here first-time buyers might have an easier time becoming homeowners. These are the towns and cities where prices are reasonable, there are more homes to go around, and newbies won’t have to sacrifice their social lives or suffer long commutes.
The Realtor.com® economics team identified these top real estate markets for first-time homebuyers in 2023. More than half are located in the Northeast, mostly in smaller cities that aren’t far from larger urban areas where there are plenty of jobs, things to do on a Saturday night, and lots of nearby outdoor amenities. Some of the top picks are more rural areas that are being built up, while others have struggled in recent years and are coming back up.
Their biggest draw is that all of these places offer more affordable homes for sale, compared with their regions of the country.
“Midsized towns with lots of amenities for young people and more affordable homes are great places for first-time homebuyers, especially in 2023,” says Realtor.com Senior Economist George Ratiu. “They do have local employment markets, which are strong enough to support young professionals getting a start in their careers.”
To come up with the list, the Realtor.com economics team looked at places with at least 5,000 residents in the 100 largest metropolitan areas. Then the team factored in the percentage of 25- to 34-year-olds living there (prime first-time buyer years), average commute times, and unemployment rates in the larger metropolitan area. (Metros include the main city and surrounding towns and smaller urban areas.)
Realtor.com considered the number of homes for sale per 1,000 households and affordability measured by home prices compared with incomes of 25- to 34-year-olds in the 12 months ending November 2022. The economics team also included the number of food and drink establishments per 1,000 households and forecasted sales and price growth in 2023.
So what are the top real estate markets for first-time buyers this year?
1. Portsmouth, VA
Median home list price: $239,000*
Metro: Virginia Beach, VA
The historic seaport city of Portsmouth, which sits across the Elizabeth River from the better-known Norfolk, VA, has become popular with first-time and other buyers for one big reason: It’s still affordable for the desirable Hampton Roads region.
“If you’re trying to save a little money on your mortgage, you can live here and still be able to commute,” says associate real estate broker Heidi Johnson, of Bunch Real Estate.
The city moved up from the fifth spot on last year’s list of the best places for first-time homebuyers to take first place. There are plenty of good jobs, including many military ones, in the city of about 100,000 thanks to the naval medical center and the Coast Guard base. There is also an international port as well as shipyards based there with a new casino opening there this month.
“The military presence keeps our area pretty stable,” says Johnson.
Younger buyers eager to go out can hit up the Olde Towne section of downtown Portsmouth, which offers restaurants, wine bars, shops, and the Children’s Museum of Virginia.
Many homes here date to the 19th century; some need plenty of work, while others have been restored. There are also condos, townhomes, and some new construction at “a good variety of price points,” says Johnson. There are even million-dollar-plus houses along the area’s waterways.
The majority of properties for sale in the city are single-family abodes. This three-bedroom, 2.5-bath Colonial is on the market for just over $300,000—and the seller is offering to help cover closing costs for those who pay full price.
2. DeForest, WI
Median home list price: $389,900
Metro: Madison, WI
Those looking for homes within commuting distance of Madison, about 30 minutes southwest, might want to consider DeForest, a small town on the Yahara River.
The giant, pink elephant sculpture outside of a local gas station is a popular attraction with tourists and locals. The town is also home to Elenbach’s Cheese Chalet, which specializes in Wisconsin-made cheeses, selling more than 400 varieties. And every June, the city hosts its Dragon Art Fair & Silent Auction featuring wares from local artists, live music, and plenty of food.
While there are condos, townhomes, and single-family homes, including this three-bedroom, two-bathroom house on a half-acre for $375,000, most of the listings in the town are for land in newly planned communities. Buyers seeking new construction can find plenty of lots; the typical third of an acre parcel is priced at around $125,000, on the southeastern side of town.
