The 10 best housing markets for first-time homebuyers in 2022

Between skyrocketing home values and widespread housing supply shortages, buying a home in today's competitive seller's market is a challenge. It's even more difficult for first-time homebuyers who haven't yet built equity to use as a down payment.

But, some housing markets offer more choices and better affordability for first-time buyers, according to a new report from real estate company Realtor.com.

Realtor.com analyzed more than a thousand small towns and cities within the 100 largest metros across the U.S. to find which markets offer the most benefits to first-time homebuyers. The areas were ranked based on a number of factors that are important to new buyers, including affordability, job opportunities and local amenities.

"Buying a first home is always a challenging undertaking, and it's been an especially tough couple years for first-time buyers, many of whom are struggling to find a home that's within their budget or win in a competitive bidding situation," said Realtor.com Chief Economist Danielle Hale. "With this in mind, and the fact that remote work has given people more flexibility in where they live, we wanted to identify markets where first timers have a chance to become homeowners and find a great quality of life."

Keep reading to learn more about the best real estate markets for first-time homebuyers. If you're in the process of buying your first home, visit Credible to compare rates across multiple mortgage lenders at once.

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First-time homebuyers look for good jobs, short commutes 

Someone's first home isn't always their dream home, but that doesn't mean first-time homebuyers want to sacrifice quality of living. Realtor.com's first-time homebuyer analysis used the following criteria to help buyers find housing markets with all the amenities they want:

• A higher proportion of young residents. Among the areas highlighted in the study, 25- to 34-year-olds make up 15.2% of the population, on average. The share of younger adults in the country overall is 13.5%
• More affordable home choices. The top markets have an average of 72.9 active listings per 1,000 households, which is well above the national average of 44.9. Home affordability was also taken into account, measured by comparing the average listing price to the area's median gross income.
• Promising job growth. The study filtered out small towns and cities with an unemployment rate that's higher than the national average.
• Proximity to big cities. The areas on this list have an average expected commute time of 26 minutes to the nearest metro areas, which is shorter than the U.S. average of 30 minutes.
• Plenty of restaurants and bars. The average count of food and drink establishments per 1,000 households is 5.3, which is equivalent to the national rate.

In addition, the best small towns and cities for first-time homebuyers have healthy local real estate markets. Most of the markets highlighted in the study have a forecasted home sales price growth rate that's higher than the national average. 

Prospective homebuyers should also consider mortgage costs when considering home affordability. Mortgage rates are expected to rise this year as the Federal Reserve plans multiple benchmark rate hikes. The Mortgage Bankers Association (MBA) predicts that the average 30-year mortgage rate will rise to 4.0% in 2022, up from 3.1% in 2021. 

One way to combat rising mortgage interest rates is to shop around across multiple lenders. This ensures that you get the lowest possible rate on a home loan for your financial situation. You can compare mortgage rates for free without impacting your credit score on Credible.

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Tips for buying a starter home in 2022

Purchasing your first home is a significant financial milestone, but it can seem like a daunting task. That's why it's important to do your research, so you can make an informed homebuying decision. Here are a few tips for buying a first home:

• Settle down in an area you like. In order to make homebuying worthwhile, you should plan on living in your home for several years before upgrading to a second home. Consider factors that are important to your quality of life, such as short commute times or a variety of local amenities.
• Be flexible. Your first home may not have everything you need, so decide what's most important to you. For example, you may sacrifice a second bathroom to find a house in your price range. Having flexibility with your closing date may also help set your offer apart from the rest in a bidding war.
• Come prepared with financing. In order to show real estate agents you're serious about buying a home, you'll need a mortgage preapproval letter. This can also help you determine which homes are in your price range, as well as lock in a mortgage rate.

You can begin the mortgage preapproval process and see your estimated mortgage rate on Credible. That way, you can start shopping around for your new home.

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