Although home buying is becoming more expensive, 2023 had the highest percentage of first-time home buyers in six years, according to a new analysis from Zillow.
As part of its analysis, Zillow said that these 10 cities were the most favorable for first-time home buyers.
1. St. Louis
2. Detroit
3. Minneapolis
4. Indianapolis
5. Austin
6; Pittsburgh
7. San Antonio
8. Birmingham
9. Kansas City
10. Baltimore
Zillow looked at a number of factors to create the list, including the number of affordable homes on the market. Zillow defines affordable as a home that costs a household no more than 30% of its income on the estimated monthly mortgage cost.
The data found that 66.7% of listings in St. Louis were considered "affordable" and there were 3.4 affordable listings per 100 renters. Detroit had a slightly lower percentage of homes being considered affordable, but the city did have a higher number of affordable homes listed per 100 renters.
"Affording a home is a tough hill to climb, and it's especially steep for those buying their first home. Headwinds like mortgage rates, low inventory and rising rents are still strong, but easing," said Zillow senior economist Orphe Divounguy. "Attractive homes are moving fast, so those looking to buy this spring should get their finances in order now, including getting pre-approved for a home loan. The increase in new listings this spring, due both to new construction and to more homeowners choosing to sell, will give buyers more options and help to ease price growth. The housing train is slowing down just enough to give more first-time buyers an opportunity to hop on board."
SEE MORE: Baby boomers plan to keep their homes as they grow older, report shows
Last week, Redfin released a report that said it takes an income of about $76,000 a year to afford a basic starter home in the U.S., up by over 8% in the last year. Four years ago, the typical American needed just over $40,000 a year to afford a starter home.
According to Redfin, the typical starter home sold for $240,000 in February, up 3.4% from 2023. Monthly payments for a starter home stood at $1,896 in February, up 8.2% from a year earlier, Redfin said.
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