Even as home prices galloped higher in 2021, the American dream of owning a place of their own became a reality for many Americans, including first-time homebuyers. Fueled by pandemic-induced low interest rates and low foreclosure rates, the 2021 housing market had its highest number of home sales in 15 years.
All eyes in the real estate industry are on Generation Y, also known as millennials, as they reach age 30 and look to buy their first home. Where will that be? Waves of millennials seeking that first home have been flooding the market since the first ones turned 30 in 2020. The crest of the wave will peak between 2022 and 2024, when 4.8 million people will turn 30 each year.
To determine the best places for them (or anyone) to buy a first home, 24/7 Wall St. reviewed an index compiled by the National Association of Realtors for their list of The Best Markets for First-Time Homebuyers in 2022, ranking American cities with populations over 5,000 on a variety of factors. (Price is hardly the only consideration, but see the cheapest place to buy a home in every state.)
Click here to see the best places to buy a first home in 2022
Click here to read our detailed methodology
First-time home purchasers benefited from a drop in the 30-year fixed rate to 2.65% in January 2021, from 3.65% in mid-March 2020. That helps explain why 40% of all homes were purchased by first-time buyers. Home ownership in the U.S. stood at 65.4% in the first quarter of 2021, according Census Bureau data.
But interest rates that low will become a thing of the past before long, with the Federal Reserve set to raise its benchmark rates possibly as soon as March, and other rate hikes under consideration. In response to the forecasted rate hike, the 10-year Treasury yield climbed to a two-year high on Jan. 10. Looming higher interest rates places special urgency on Generation Y’s house hunt. (If getting a start in the real estate market is a priority, you can buy a home for under $100,000 in these American cities.)
Given the population surges in the Sun Belt and the South, you would think the lion’s share of best places to buy a first home would be in those places. However, the National Association of Realtors list contains towns in states that you wouldn’t expect.
10. Maitland, Florida
> Pct. of population ages 25-34: 17.5%
> Projected home price increase, 2022: 5.4%
> Active listings, 2021: 67 per 1,000 households
> Food and drink establishments: 5.3 per 1,000 households
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Source: RiverNorthPhotography / iStock Unreleased via Getty Images
9. Ferndale, Michigan
> Pct. of population ages 25-34: 15.9%
> Projected home price increase, 2022: 5.6%
> Active listings, 2021: 64.4 per 1,000 households
> Food and drink establishments: 4.9 per 1,000 households
8. Kuna, Idaho
> Pct. of population ages 25-34: 13.7%
> Projected home price increase, 2022: 7.9%
> Active listings, 2021: 160 per 1,000 households
> Food and drink establishments: 5.1 per 1,000 households
Source: Courtesy of City of Grimes, Iowa via Facebook
7. Grimes, Iowa
> Pct. of population ages 25-34: 14.6%
> Projected home price increase, 2022: 3.9%
> Active listings, 2021: 110.4 per 1,000 households
> Food and drink establishments: 5.3 per 1,000 households
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Source: Courtesy of Town of Cottage Grove Wisconsin via Facebook
6. Cottage Grove, Wisconsin
> Pct. of population ages 25-34: 15%
> Projected home price increase, 2022: 3.9%
> Active listings, 2021: 60.7 per 1,000 households
> Food and drink establishments: 5.6 per 1,000 households
Source: Davel5957 / iStock via Getty Images
5. Portsmouth, Virginia
> Pct. of population ages 25-34: 16%
> Projected home price increase, 2022: 2.7%
> Active listings, 2021: 69.4 per 1,000 households
> Food and drink establishments: 5.7 per 1,000 households
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4. Beech Grove, Indiana
> Pct. of population ages 25-34: 15.6%
> Projected home price increase, 2022: 5.5%
> Active listings, 2021: 45.7 per 1,000 households
> Food and drink establishments: 5.1 per 1,000 households
Source: Courtesy of City of Mauldin SC Government via Facebook
3. Mauldin, South Carolina
> Pct. of population ages 25-34: 13.5%
> Projected home price increase, 2022: 5.7%
> Active listings, 2021: 53 per 1,000 households
> Food and drink establishments: 5.1 per 1,000 households
2. Chalco, Nebraska
> Pct. of population ages 25-34: 14.5%
> Projected home price increase, 2022: 4.9%
> Active listings, 2021: 52.4 per 1,000 households
> Food and drink establishments: 5.2 per 1,000 households
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1. Magna, Utah
> Pct. of population ages 25-34: 15.4%
> Projected home price increase, 2022: 8.5%
> Active listings, 2021: 46.1 per 1,000 households
> Food and drink establishments: 5.8 per 1,000 households
Methodology:
To determine the best places to buy a first home, 24/7 Wall St. reviewed an index compiled by the National Association of Realtors for their list of The Best Markets for First-Time Homebuyers in 2022. American cities with populations over 5,000 were ranked based on the share of adults ages 25-34 in the population, availability and affordability of homes, local unemployment rate, average commute time, food and drink establishments per capita, and the forecasted growth in metro home sales and home price growth in 2022. Data came from the NAR as well as the U.S. Bureau of Labor Statistics and the U.S. Census Bureau. Only the highest-scoring city or place in each metro area was considered for the list.
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