The 5 most affordable cities for first-time home buyers — and the 5 least affordable
An old rule of thumb may not be so handy anymore.
First-time home buyers used to be told to look for properties that were about three times their annual income to help them gauge affordability. In the first quarter of 2024, however, home prices were five times higher than the income of potential first-time buyers, on average, across the U.S., according to NerdWallet’s latest First-Time Home Buyer Affordability Report.
The housing market is in a difficult spot right now: Home prices are stubbornly high, mortgage rates are on the rise, and inventory is low in markets throughout the country.
This is edging first-time buyers out of the market. The cohort made up just 26% of all home buyers in 2023 — a 34% drop from a year prior and the lowest on record, according to the National Association of Realtors.
These are the five most affordable cities for first-time home buyers and the five least affordable, based on how many times a potential buyer’s annual income home prices were during the first quarter of the year, according to NerdWallet.
Pittsburgh
Pittsburgh was the most affordable city for the first three months of the year, with home prices listed at 2.8 times potential first-time buyer income on average. That’s even as prices in the city rose 11% from the fourth quarter of last year.
Detroit
Motown was the second-most affordable city, with home prices listed at an average of 2.9 times a first-time buyer’s annual income during the first quarter of the year.
Cleveland
With average home prices coming in at 3.0 times the annual income of first-time home buyers, Cleveland is third on the list — and it’s the last city to fall within the three-times-income rule of thumb.
Buffalo
Home prices in Buffalo, New York were, on average, 3.2 times the annual income of potential first-time home buyers, making it the fourth-most affordable city for the group
Baltimore
Baltimore rounds out the top five most affordable cities in the country for first-time buyers with home prices averaging out to 3.4 times the income of first-timers.
Boston and Miami
Boston and Miami tied as the fifth-most expensive cities on NerdWallet’s list. Each saw home prices that were, on average, 7.0 times the annual income of potential first-time buyers.
New York City
Surprisingly, New York was not the most expensive city in the country for first-timers last quarter. Homes in the city were listed at 7.1 times the income of potential first-time buyers, on average.
San Jose
San Jose was the third-most expensive city for first-time home buyers, with home prices listed at an average of 7.7 times their average annual income.
San Diego
The second-costliest city for first-time buyers was San Diego. It had home prices that were 9.3 times first-time buyer income in the first three months of 2024.
Los Angeles
The most expensive city in the country for those looking to buy their first home was Los Angeles. Homes in the city, which saw listings rise 13% from the last quarter of 2023 to the first quarter of this year, were priced 12 times higher than first-time buyers’ income, on average.