Top markets for first-time home buyers offer affordable options and peers living nearby

• St. Louis is the top major market in the U.S. for first-time home buyers. 
• Half of the 10 best markets for first-time buyers are in the Midwest. 
• First-time buyers made up half of all home buyers last year, the highest share since at least 2017. 

Seattle, WA – April 4, 2024 (PRNewswire) First-time home buyers in 2023 accounted for the largest share of home purchases in years. A new Zillow® analysis names this year’s best markets for first-time home buyers, where their dollars go further and starter homes are relatively plentiful. 

First-time buyers made up half of all home buyers last year, according to Zillow’s Consumer Housing Trends Report. That’s the highest share in the report’s history, which dates back to 2018, and up from a low of 37% in 2021. The “rate lock” effect — occurring when homeowners are financially incentivized to keep their current home because of the low rate on their current mortgage — has kept some would-be repeat buyers on the sidelines. 

“Affording a home is a tough hill to climb, and it’s especially steep for those buying their first home. Headwinds like mortgage rates, low inventory and rising rents are still strong, but easing,” said Zillow Senior Economist Orphe Divounguy. “Attractive homes are moving fast, so those looking to buy this spring should get their finances in order now, including getting pre-approved for a home loan. The increase in new listings this spring, due both to new construction and to more homeowners choosing to sell, will give buyers more options and help to ease price growth. The housing train is slowing down just enough to give more first-time buyers an opportunity to hop on board.”

Top 10 markets for first-time home buyers in 2024 

1. St. Louis
2. Detroit
3. Minneapolis
4. Indianapolis
5. Austin
6. Pittsburgh
7. San Antonio
8. Birmingham
9. Kansas City
10. Baltimore

Zillow’s ranking of the best markets for first-time buyers is based on rent affordability, the share of for-sale listings a typical household can comfortably afford, how stiff the competition is expected to be for those affordable listings, and how many similar-age households¹ live in the area. 

The top two markets in Zillow’s ranking, St. Louis and Detroit, score well in terms of affordability — both for rental affordability as a prospective buyer builds up savings for a down payment, and for the number of affordable homes available to buy. Austin, while not the most affordable housing market on this list, ranks first in the number of similar-age households living there with which a buyer can build a community. 

First-time buyer tips and tricks
Zillow has gathered tools on one easy-to-navigate web page to help aspiring first-time buyers make the leap to homeownership, from getting finances in tip-top shape to hiring the right real estate agent who can help a buyer win a home. 

Zillow’s affordability calculator can help buyers understand their price range, including some of the hidden costs of homeownership that are often overlooked. 

It’s important for first-time buyers to understand how their credit score can impact their loan options and costs. A top loan officer can help a buyer understand all of their options, such as whether “paying points” or an adjustable rate mortgage might make sense for a buyer’s specific financial situation. 

Renters who pay their landlords through Zillow can now help build or enhance their credit history by opting in to rent payment reporting, with on-time payments reported to a major national credit bureau. 

A down payment is often the biggest financial hurdle for a first-time buyer. Those without enough money saved for a 20% down payment shouldn’t fret — nearly half of buyers put down less than 20%. Zillow displays down payment assistance programs a buyer may be eligible for on all for-sale listings. 

Metro Area	Rent Affordability	Share of Affordable Listings	Affordable Listings Per 100 Renters	Share of Similar-Age Households
St. Louis	19.9 %	66.7 %	3.4	26.0 %
Detroit	21.5 %	63.6 %	4.0	24.3 %
Minneapolis	19.8 %	48.4 %	2.5	28.1 %
Indianapolis	22.0 %	50.4 %	2.6	28.9 %
Austin	20.3 %	23.0 %	1.3	33.6 %
Pittsburgh	21.9 %	62.9 %	3.7	24.4 %
San Antonio	22.6 %	32.8 %	2.6	30.6 %
Birmingham	22.4 %	47.5 %	4.2	25.3 %
Kansas City	21.0 %	50.6 %	2.2	27.2 %
Baltimore	22.2 %	56.4 %	2.3	27.1 %

1 Ages 29–43. Zillow Research shows nearly half of first-time buyers are in this age range.

Methodology
Zillow’s 2024 list of the best markets for first-time buyers is based on four metrics: 

• Rent affordability, as defined by the share of median household income spent on rent.
• The share of available for-sale inventory on Zillow that the median household can comfortably afford, spending no more than 30% of income on the estimated monthly mortgage cost, assuming 5% down and 6.94% mortgage interest rate. 
• The ratio of affordable for-sale inventory to renter households. More inventory per renter household is an indicator of less competition for each listing. 
• The share of households ages 29–43. More households of similar age mean a higher score in Zillow’s ranking. 

About Zillow Group
Zillow Group, Inc. (Nasdaq: Z and ZG) is reimagining real estate to make home a reality for more and more people. As the most visited real estate website in the United States, Zillow and its affiliates help people find and get the home they want by connecting them with digital solutions, dedicated partners and agents, and easier buying, selling, financing and renting experiences. 

Zillow Group’s affiliates, subsidiaries and brands include Zillow®, Zillow Premier Agent®, Zillow Home Loans℠, Trulia®, Out East®, StreetEasy®, HotPads®, ShowingTime+℠, Spruce® and Follow Up Boss®. 

All marks herein are owned by MFTB Holdco, Inc., a Zillow affiliate. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org). © 2023 MFTB Holdco, Inc., a Zillow affiliate.

SOURCE Zillow

Property managers’ race to woo tenants eases, signaling a tighter market for renters this spring

Seattle, WA – March 20, 2024 (PRNewswire) After a winter that saw nearly a third of rental listings offering tenants tempting concessions such as free months of rent or free parking, Zillow’s latest data reveals the share of rentals offering perks may have hit its peak. The good news for renters is that the market is friendlier than it was a year ago, with the share of rentals offering a concession rising 5.6 percentage points.

As spring approaches, February data show 32.2% of rental listings on Zillow offered a concession, down slightly from December and up 5.6 percentage points from a year earlier. That marks the slowest annual growth pace since last June. After seven months of consecutive monthly increases to end 2023, the share of rentals offering concessions fell to 31.9% in January before a slight uptick last month.

If past seasonal trends continue to hold, renters looking to secure a new lease in the upcoming spring or summer may encounter fewer incentives and increased competition.

“The rental market always ebbs and flows with the seasons, so it’s no shock that we’re seeing concessions start to level off as we move into the warmer months,” said Anushna Prakash, an economic research data scientist at Zillow. “It looks like we’re beginning to see the market balance the ongoing high demand from renters with a competitive environment for property managers and landlords. While concessions are beginning to dip, they are more common than they were a year ago, helped by new buildings that have opened their doors.”

While the expected seasonal shift accounts for the stabilization of concessions, the pace of rent growth and vacancy levels offer deeper insights. Recently, rents haven’t been going up as quickly as they did before the pandemic, and it looks like supply and demand are starting to balance out. The share of rental housing units that were vacant  was at 6.6% in the fourth quarter of 2023, which is just a bit higher than the nearly forty-year low seen at the end of 2021. This indicates there are enough eager renters, nudging the market toward stability.

The Metros Leading the Concession Charge

Despite the national trend toward stabilization, certain markets continue to lead with high shares of concessions. These metros exemplify the diversity within the rental market, with strategies varying widely across regions to attract tenants.

10 Metro Areas with the Largest Share of Rental Concessions

Metro	Share of Rentals w/ Concessions	Year over Year (YoY) Change in Share of Concessions	Typical Rent in Zillow Observed Rent Index (ZORI)	YoY Change in ZORI
Salt Lake City, UT	60.3 %	+ 22.9 percentage points	$1,656	1.6 %
Austin, TX	55.0 %	+ 17.9 pp	$1,735	-3.0 %
Charlotte, NC	53.5 %	+ 19.0 pp	$1,775	1.7 %
Dallas, TX	50.7 %	+  13.5 pp	$1,747	0.5 %
Raleigh, NC	50.6 %	+ 13.4 pp	$1,747	1.2 %
Nashville, TN	49.9 %	+ 9.9 pp	$1,874	0.7 %
Washington, DC	49.4 %	– 2.9 pp	$2,273	5.1 %
Minneapolis, MN	49.4 %	+ 4.3 pp	$1,615	2.9 %
Phoenix, AZ	48.8 %	+ 8.6 pp	$1,846	1.4 %
Denver, CO	48.1 %	+ 8.5 pp	$2,007	3.1 %
United States	32.2 %	+ 5.6 pp	$1,959	3.5 %

Source: Zillow data

In nine of the ten metros where the share of rental concessions is highest, rents are growing more slowly than the nationwide 3.5% annual rate, and they are outright falling in Austin. This could mean there are more apartments available than there are people looking to rent them.

On the other hand, areas where there are fewer of these kinds of deals available, such as Providence, R.I. (12.3% of rentals offered concessions in February), Hartford, Conn. (16.3%), and Cincinnati, Ohio (18.9%), are seeing some of the fastest rent increases. In Providence, typical rents have jumped by 8.1% since last year. Hartford and Cincinnati both saw rents increase by 6.4%.

Zillow provides a user-friendly platform for housing providers to share concessions information with prospective renters. Property managers can easily list concessions for their properties, and renters can find all available offers under the “Special Offers” tab on participating building detail pages, enabling them to make well-informed housing decisions.

About Zillow Group
Zillow Group, Inc. (Nasdaq: Z and ZG) is reimagining real estate to make home a reality for more and more people. As the most visited real estate website in the United States, Zillow and its affiliates help people find and get the home they want by connecting them with digital solutions, dedicated partners and agents, and easier buying, selling, financing and renting experiences.

Zillow Group’s affiliates, subsidiaries and brands include Zillow®, Zillow Premier Agent®, Zillow Home Loans℠, Trulia®, Out East®, StreetEasy®, HotPads®, ShowingTime+℠, Spruce® and Follow Up Boss®.

All marks herein are owned by MFTB Holdco, Inc., a Zillow affiliate. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org). © 2023 MFTB Holdco, Inc., a Zillow affiliate.

SOURCE Zillow

Study underscores that factors not related to income are keeping the Black-white homeownership gap wide

• Racial mortgage affordability gap shrunk by more than a third since 2012
• Among all races, renting families able to afford a mortgage dropped by nearly half from 2021 to 2022
• White households own homes at a 73% rate, while Black households own at 44%, with over half of the top 50 metros showing a gap of 30 points or more

Seattle, WA – Feb. 23, 2024 (PRNewswire) The gap between the share of Black and white renting families that could comfortably afford a mortgage payment shrunk significantly during the pandemic, a new Zillow® report shows. Despite this progress, a notable homeownership gap and disproportionate rate of mortgage denials persists, suggesting that other barriers not related to income are also impeding Black families’ access to homeownership.

In 2022, approximately 38.6% of 138 million U.S. families¹ were not homeowners, according to the American Community Survey. Among those, more than 6.3 million families were considered “income mortgage-ready,”² meaning their income would allow for paying a typical mortgage payment in their area without being cost burdened. 

About 7.8% of Black non-home owning families were income-ready for a mortgage, compared to 12.5% of white families — a gap of 4.7 percentage points. While significant, the gap shrunk by more than one-third since 2012, when it stood at 7.9 percentage points.

“Despite the significant decline in mortgage affordability in the past two years, millions of families who do not own their home have the means to afford the largest share of a homeowner’s cost — the mortgage,” said Zillow Senior Economist Orphe Divounguy. “While some families may choose to rent, many are simply constrained. It’s crucial to recognize the existence of additional barriers beyond monthly cost, including access to funds for a down payment and closing costs — as well as other barriers that significantly contribute to mortgage denials, like insufficient credit scores and lack of access to credit. These barriers especially impact people of color.”

Still, among all races, the number of renting families able to afford a mortgage dropped to 6.3 million in 2022 from 12.9 million in 2021, as mortgage rates doubled. While higher mortgage rates and higher prices affected everyone, the median family income of renters rose more for Blacks than for whites since 2012. Regions where Black family incomes rose most generally experienced a greater decline in the racial mortgage readiness gap during the 2012 to 2022 period.

Detroit has the highest share (13.3%) of Black renting families earning enough income to comfortably afford a mortgage, followed by Memphis (12.8%), St. Louis (12.0%), Houston (11.6%) and Cleveland (11.2%). While home values are relatively lower in those communities and more Black families could afford the typical mortgage payment, access to homeownership remains a challenge.

Racial disparities in home values, homeownership rates and credit security
Even though the incomes of Black renting families rose faster during the pandemic, significant disparities persist in homeownership rates and home values between Black and white Americans. Nationally, white households owned homes at a much higher rate (73%) than Black households (44%), and the gap exceeded 30 percentage points in more than half of the country’s 50 largest metros in 2022.

Compounding the issue, the typical home owned by a white family is still worth far more than the typical home owned by a Black family. Although there has been incremental progress in narrowing the home value gap, it still exceeds 10 percentage points in 42 of the top 50 metro areas.

Discriminatory lending practices and higher denial rates for Black mortgage applicants, compounded by credit history issues, also pose challenges to housing equity. In 2022, Black applicants saw a 146% higher mortgage loan denial rate compared to white applicants, potentially hindering future generational wealth transfer. Credit history is the most common reason cited for these denials.

Initiatives aimed at things like enhancing access to down payment assistance and credit-building opportunities as well as implementing reforms in zoning, together with efforts to construct and preserve affordable housing in thriving communities, are vital.

Housing Inequalities by Race

Top 50 metros	Share of Black Families That Can Afford the Typical  Mortgage  Without Cost Burden(non owners)	Share of White Families That Can Afford the Typical Mortgage Without Cost Burden(non owners)	Share of Families That Can Afford the Typical  Mortgage Without Cost Burden (overall; all races)	Typical Home Value Gap: White vs. Black Households(in percentage points)	Homeownership Gap: White vs. Black Households(in percentage points)
United States	7.8 %	12.5 %	11.9 %	17.9 pp	28.9 pp
New York, NY	2.6 %	11.5 %	6.9 %	15.7 pp	33.0 pp
Los Angeles, CA	1.1 %	4.2 %	2.1 %	30.8 pp	25.7 pp
Chicago, IL	8.3 %	21.9 %	16.3 %	39.4 pp	33.5 pp
Dallas, TX	6.5 %	13.5 %	10.6 %	22.5 pp	30.2 pp
Houston, TX	11.6 %	19.3 %	13.7 %	22.9 pp	29.2 pp
Washington, DC	6.2 %	12.8 %	9.1 %	9.6 pp	19.1 pp
Philadelphia, PA	7.3 %	15.2 %	12.8 %	28.3 pp	27.1 pp
Miami, FL	4.7 %	13.1 %	7.2 %	22.2 pp	27.2 pp
Atlanta, GA	8.1 %	12.0 %	10.1 %	17.7 pp	24.3 pp
Boston, MA	2.8 %	5.4 %	4.8 %	18.1 pp	31.3 pp
Phoenix, AZ	4.2 %	5.5 %	4.4 %	14.2 pp	33.7 pp
San Francisco, CA	0.3 %	4.2 %	2.5 %	29.2 pp	29.2 pp
Riverside, CA	4.4 %	3.8 %	3.5 %	1.2 pp	30.6 pp
Detroit, MI	13.3 %	19.6 %	18.6 %	45.4 pp	34.0 pp
Seattle, WA	2.3 %	4.5 %	4.5 %	16.7 pp	34.3 pp
Minneapolis, MN	7.1 %	7.8 %	7.7 %	14.0 pp	46.0 pp
San Diego, CA	1.7 %	2.1 %	1.8 %	24.4 pp	32.3 pp
Tampa, FL	5.4 %	10.6 %	9.2 %	11.3 pp	27.0 pp
Denver, CO	1.3 %	4.2 %	3.6 %	12.7 pp	26.0 pp
Baltimore, MD	10.0 %	13.4 %	12.1 %	16.9 pp	30.8 pp
St. Louis, MO	12.0 %	17.6 %	17.3 %	44.7 pp	32.9 pp
Orlando, FL	6.3 %	10.0 %	7.6 %	13.2 pp	24.4 pp
Charlotte, NC	7.0 %	12.6 %	10.2 %	18.2 pp	31.5 pp
San Antonio, TX	4.9 %	16.6 %	10.1 %	10.5 pp	28.0 pp
Portland, OR	2.8 %	3.1 %	3.1 %	3.7 pp	38.9 pp
Sacramento, CA	2.1 %	3.8 %	3.2 %	5.8 pp	28.5 pp
Pittsburgh, PA	10.9 %	20.1 %	19.7 %	26.6 pp	39.9 pp
Cincinnati, OH	6.8 %	13.4 %	12.8 %	18.9 pp	39.5 pp
Austin, TX	6.4 %	6.3 %	5.5 %	22.0 pp	23.9 pp
Las Vegas, NV	3.6 %	7.5 %	5.4 %	5.1 pp	34.0 pp
Kansas City, MO	7.9 %	15.7 %	13.6 %	25.1 pp	32.5 pp
Columbus, OH	10.7 %	13.6 %	12.9 %	20.6 pp	36.2 pp
Indianapolis, IN	9.9 %	16.4 %	14.6 %	9.4 pp	33.3 pp
Cleveland, OH	11.2 %	23.8 %	19.1 %	40.6 pp	36.0 pp
San Jose, CA	0.0 %	3.5 %	1.9 %	17.6 pp	33.9 pp
Nashville, TN	3.0 %	7.3 %	6.3 %	14.4 pp	27.6 pp
Virginia Beach, VA	7.9 %	13.4 %	10.2 %	7.1 pp	27.9 pp
Providence, RI	2.3 %	5.1 %	4.8 %	10.1 pp	26.0 pp
Jacksonville, FL	9.5 %	9.9 %	9.9 %	21.1pp	27.2pp
Milwaukee, WI	5.3 %	12.5 %	10.4 %	38.2 pp	43.9 pp
Oklahoma City, OK	10.1 %	17.0 %	15.6 %	19.3 pp	33.9 pp
Raleigh, NC	3.5 %	8.1 %	6.6 %	15.5 pp	24.9 pp
Memphis, TN	12.8 %	20.8 %	16.2 %	32.7 pp	31.2 pp
Richmond, VA	9.0 %	12.1 %	12.2 %	13.0 pp	21.8 pp
Louisville, KY	9.3 %	14.5 %	13.3 %	29.4 pp	38.1 pp
New Orleans, LA	5.3 %	17.4 %	11.3 %	22.4 pp	26.4 pp
Salt Lake City, UT	5.8 %	3.6 %	3.0 %	7.5 pp	45.0 pp
Hartford, CT	9.4 %	13.5 %	15.7 %	23.4 pp	32.5 pp
Buffalo, NY	9.5 %	14.1 %	13.4 %	41.5 pp	33.1 pp
Birmingham, AL	9.9 %	11.1 %	11.5 %	46.4 pp	28.0 pp

About Zillow Group:
Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining real estate to make home a reality for more and more people. As the most visited real estate website in the United States, Zillow and its affiliates help people find and get the home they want by connecting them with digital solutions, great partners, and easier buying, selling, financing and renting experiences.

Zillow Group’s affiliates, subsidiaries and brands include Zillow®, Zillow Premier Agent®, Zillow Home Loans℠, Trulia®, Out East®, StreetEasy®, HotPads®, ShowingTime+℠, Spruce® and Follow Up Boss®.

All marks herein are owned by MFTB Holdco, Inc., a Zillow affiliate. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org). © 2023 MFTB Holdco, Inc., a Zillow affiliate.

¹ For the purpose of this analysis, “family” refers to a related group within a household, as identified in the American Community Survey.

² This assumes a family can only afford a 3% down payment at the highest mortgage rate recorded each year based on applications submitted to the Freddie Mac from lenders across the country. A lower down payment implies higher monthly mortgage payments, raising the threshold income needed to be considered mortgage ready in this analysis.

SOURCE Zillow