Dallas lands on list of 10 best cities for first-time homebuyers
A new analysis from Zillow says that first-time homebuyers will have the best luck in the Southeast, but don't count out Texas. In fact, San Antonio and Dallas both show up in the real estate website's top 10, with Alamo City at No. 5 and Big D taking No. 9.
What makes these cities so first-timer friendly? They scored well on the five metrics Zillow used to determine the rankings:
- Lower median home value (which makes for a more affordable down payment)
- A strong home value forecast (as an indicator of building equity)
- Higher inventory-to-household ratio (so buyers can more easily capture available supply)
- A shorter Breakeven Horizon (to show a financial advantage of buying over renting)
- A greater share of listings with price cuts (to indicate a less competitive market)
Dallas does well with 4.4 percent appreciation and a solid Breakeven Horizon of one year and eight months, while San Antonio wins big with its 17.2 share of listings with a price cut and a low median home price of $158,500.
Houston and Austin are also in the 35-city study, coming in at Nos. 15 and 20, respectively. It takes nearly a year longer to recoup your buying costs in Houston than it does in Dallas, and the median home price in Austin is more than $100,000 above that of San Antonio.
Zillow reveals that more than two-thirds of renters say that saving for a down payment is the biggest barrier to homeownership. In all but three of the 10 best markets for first-time buyers, the median home value is lower than the national median home value, which means they require less money up front as a down payment. Dallas is one of those pricey three, but San Antonio falls well below the national median price of $196,500.
Orlando and Tampa sweep the top two, with Indianapolis taking third. And the toughest area for first-timers? California, which bottoms out on the list with San Diego, Los Angeles-Long Beach-Anaheim, San Jose, and San Francisco. In all four of these markets, appreciation is low, home prices are high, and it could take up to five years to break even on your investment.