It's no secret that spring 2021 will be an arduous time for anyone endeavoring to purchase a home.
In most of our nation's metros, prices are historically high, and—thanks to intense competition [1] over most homes on the market—houses are selling well above the asking price in many cases. It's only expected to heat up, making things especially challenging for the largest new homebuying generation, millennials.
"For a first-time home buyer in this generation, the issue of affordability is front and center, and that’s especially true for many millennials who moved to big cities to start and build their careers," says George Ratiu, Senior Economist at Realtor.com. "Between student debt, slow-growing wages, and fast-growing home prices, when the pandemic hit they were still in these large cities but no closer to being able to afford a home."
Researchers are busy analyzing data to determine where in America homebuying hopefuls might stand the best chances of landing a deal this year.
So what American city did Ratiu and the data team at Realtor.com find most favorable for first-time home seekers?
Bloomington, IL, [2] where the median list price last month was $160,000—less than half of the national median price tag of $370,000 in March.
Located within two hours of Chicago [3], St. Louis [4], and Indianapolis [5], Bloomington offers plenty of jobs, low commute times, and affordable housing, Re/Max Choice Broker Becky Gerig told Realtor.com.
"For young people, there is a lot of opportunity for jobs," Gerig told Realtor.com. "We can get from one side of the town to another in 20, 25 minutes."
The researchers examined some 800 cities with at least 50,000 residents, taking into account six factors: home prices compared with local incomes; percentage of 25- to 34-year-olds living in these places; number of homes for sale; job opportunities; distance to work; and amenities such as bars and restaurants. The list was limited to one city per state, they report, to achieve geographic diversification.
The outcome:
Iowa City, Iowa; Kalamazoo, Michigan; Great Falls, Montana; Eau Claire, Wisconsin; Savannah, Georgia; Schenectady, New York; Taylorsville, Utah; Harrisonburg, Virginia; and Rapid City, South Dakota round out the top 10.
The research showed that price is a top consideration for first-time buyers, frequently millennials who have lived through two American ec0nomic crises, and who often haven't saved enough for an acceptable down payment.
According to a previous Realtor.com survey [6], 44% of potential first-time homebuyers said they haven’t saved enough for a down payment.
"Millennials' experience with recessions has taught them that economic success isn't guaranteed and sometimes living below your means makes sense," says Ali Wolf, Chief Economist at the housing research firm Zonda.
All of the top 10 markets had home prices below the national median.
For a full list and more details, visit Realtor.com [7].