Out of all the market challenges of 2022, first-time homebuyers had some of the biggest. With high home prices and equally high mortgage rates, many felt locked out of the market. Now, experts across the industry are expecting a cooldown to approach sometime within 2023. First-time homebuyers could have their opportunity to bounce back, but where are their prime opportunities?
A recent report from Realtor.com may offer some insight. The report forecasts the top 10 markets for first-time homebuyers in 2023 based on population age, housing inventory, affordability, unemployment rates, food and drink options, commute time, and forecasted price and sales growth.
Based on those criteria, here are their 10 best markets for first-time buyers:
- Portsmouth, Virginia
- DeForest, Wisconsin
- Windsor Locks, Connecticut
- Gloucester City, New Jersey
- Moore, Oklahoma
- Magna, Utah
- Eggertsville, New York
- Watervliet, New York
- Mattydale, New York
- Somersworth, New Hampshire
Other key highlights from the report:
- The ten best markets have an average of 47.8 listings per 1,000 households, higher than the national rate of 45.2. Magna has the widest selection of listings per household.
- The top towns have an average expected commute time of just 24 minutes. This is significantly faster than the national average of 30 minutes–it would save 50 hours per year for a 5-day commuter. Those looking for an especially short commute should check out Eggertsville, which has an average travel time of just 20 minutes.
- There’s an average of 5.6 food and drink establishments per 1,000 households across metro areas of the best markets, higher than the national rate of 5.3. Somersworth topped the list for proximity to restaurants.
- As for population age, there’s an average of 14.8% of residents in the 25-34 year age category, compared to the national average of 13.4%. Magna tied Moore as the youngest markets on the list.
- The best markets offer an average 2022 listing price to income ratio of 3.5 for 25- 34 year-olds, much lower than the national rate of 5.1. Mattydale and Gloucester City tied for the most affordable locations on the list.
- The best markets are located within metro areas that have an average forecasted 2023 home sales growth rate of 1.2%, higher than the national rate which is expected to decline -14.1%. In terms of price growth, Somersworth is located within the Boston metro area which is expected to have the highest growth in 2023 (+9.5%), followed closely by the Madison metro area containing DeForest (+9%).
What the experts are saying:
RISMedia spoke with Realtor.com’s Chief Economist Danielle Hale and brokers from some of the top markets listed in the report. Here are their insights.
“The housing market has not been easy for anyone over the last few years, and this has been especially true for first-time home buyers. Soaring home prices and mortgage rates raised both the upfront and monthly costs of homeownership at a time when rising rents and overall inflation made it harder to save up for the purchase,” said Realtor.com Chief Economist Danielle Hale. “Fortunately, there are signs of relief on the horizon. Recent data has shown that inflation is slowing and both rent growth and home price growth have eased up. While the cost of buying a home is expected to remain high, in 2023 home shoppers are likely to find more options on the market and reduced competition will mean that they may also have more time to evaluate options before submitting an offer.”
“The housing market will continue to be challenging for first-time buyers in the coming year, but for those with a bit of flexibility in where they live, there are markets where young buyers can find not just a relatively affordable home, but a neighborhood that offers a mix of economic opportunity and lifestyle amenities,” concluded Hale.
Mike Coke, broker/owner of Terra Firma Realty in DeForest, commented on the town’s second-place ranking:
“DeForest is a thriving small town community just minutes outside the robust city of Madison; It’s one of the most attractive places to live in Dane County. Excellent school systems, easy access to transportation, top-notch healthcare, local shopping, hiking trails, and numerous parks including a splash pad, are just a few of the local attractions. It’s also an active community hosting events such as the annual Dragon Art Fair, Farmer’s Market every Tuesday in the summer, Friday Night Flicks in the Park, and live music at the Fireman’s Park pavilion.
“Economically, DeForest is a great place to live as the job market is robust with major local entities like the University of Wisconsin, Epic, American Family, Sub Zero, and Trek Bicycle routinely contributing to some of the lowest unemployment rates in the country. The housing market is routinely strong without the major rise and fall of other “hot” markets. And, based on the affordability index published by the National Association of Realtors, Wisconsin as a whole ranks as one of the more affordable places to live based on median home prices vs. median income.”
Marsha Arpin, REALTOR® and Office Leader for Berkshire Hathaway Home Services Windsor, Connecticut Office, commented on Windsor Locks’ third-place ranking:
“The town of Windsor Locks is a great option for a first-time buyer. It is conveniently located off interstate 91 where you can reach Greater Hartford’s “hot spot” in West Hartford for restaurants in less than 25 minutes. The city of Hartford is only an 18 minutes drive and 21 minutes in the opposite direction is Springfield, Massachusetts, and MGM Casino. For day trips–Boston and Newport, Rhode Island can be reached in under 2 hours. The town is also home to Bradley International Airport, and recently began construction on the Windsor Locks train station.
“First-time homebuyers also love it for its affordability. The town boasts a low mill rate of 25.83, so a homeowners tax bill is lower than most of the state. The median list price is $274,900, which will buy a 1,700 square-foot single-family home. The inventory remains low, however, we are seeing sales prices of 102% of the listing price. That’s remarkably low compared to most other markets.”
For the full report, click here.
