It’s no secret that buying a home in America’s biggest cities poses challenges for first-time home buyers. Lack of inventory, coupled with demand, means bidders with large down payments or all-cash offers win out.
Prospects look brighter in urban pockets, primarily in the Southeast and Midwest, according to new research from Zillow®. The company’s list of the 10 best markets for first-time home buyers features cities where conditions are more favorable for those who can make only 3 to 5 percent down payments.
Orlando, FL: First pick for potential buyers
Home to more than 2 million residents and one of the fastest-growing cities in the U.S., Orlando draws transplants in search of sunny skies, outdoor recreation and job opportunities — especially in the tech and construction sectors.
The median value of Orlando homes is $172,300, and price cuts on current listings indicate that bidding wars are less likely to hamper first-time buyers. Homes here are forecast to appreciate at a sustainable rate of 4.8 percent throughout the next year. The city’s efforts to lure tech companies and support startups, particularly in the downtown district, are paying off.
Tampa, FL: A standout in second place
Situated on Tampa Bay and a stone’s throw from the Gulf of Mexico, Tampa offers a vacation-year-round vibe. The city is experiencing a population boom, as transplants migrate here to enjoy a lower cost of living, proximity to white sand beaches and opportunities for cultural enrichment.
Current development projects promise to transform the city into a STEM job hot spot with a live-work-play mindset — an environment ideal for startups. Along with job opportunities, Tampa real estate is a big draw. The median home value is $188,000 (7 percent lower than the national value), and current inventory and price cuts on listings are signs that Tampa is currently a buyers market. Additionally, Tampa homes are expected to appreciate by 4.3 percent in the coming year.
Indianapolis, IN: Crossroads of America at No. 3
Home to 10 professional sports teams and coined the Racing Capital of the World, thanks to its famed motor speedway, Indianapolis welcomes millions of visitors each year. Sporting events aside, the city maintains its long-standing reputation as a sleepy town, often underrated by those passing through on their way to coastal hubs.
That’s changing. Millennials, drawn to the city’s growing number of tech jobs, are generating buzz as economists declare Indianapolis the new Silicon Valley of the Midwest. The median value of Indianapolis homes for sale is $138,900 — over 30 percent lower than the national value — and homes are forecast to appreciate at a rate of 3.7 percent throughout the next year.
Options closer to home: Pittsburgh, Detroit and Cleveland
Rounding out Zillow’s top 10 list, these Rust Belt cities that were once manufacturing centers have experienced a resurgence as tech, health care and construction industries take hold. With median home values of $126,200, $47,700 and $59,300 respectively, these up-and-coming urban centers boast prices far below the national value, with inventory and price cuts on current listings indicating an ideal market for first-time home buyers.
Detroit homes show the largest estimated appreciation through the next year at 9 percent. A development boom continues in the city’s greater downtown district, and low cost of living draws entrepreneurs and small businesses.
Following behind Detroit, Cleveland real estate is anticipated to appreciate at a rate of 3.7 percent in a city experiencing slow but steady economic growth.
Coming in close behind, Pittsburgh homes are estimated to appreciate at 3.5 percent this coming year. A boom may be on the horizon, as the City of Bridges is just now realizing its economic potential, particularly in the medical technologies space.
Buying your first home requires research and patience, paired with financial smarts. Review online resources that offer first-time home buyer guides, and attend real estate seminars to help you make informed decisions.
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