Scranton Municipal Building

The 10 Most Affordable Cities For First-Time Home Buyers

Rachel Burris8-minute read
August 04, 2021

With home prices soaring across the country, first-time home buyers have been priced out of most markets. It’s now more important than ever that those entering the housing market for the first time know where to find the best deals. First-time home buyers may not be able to compete in the country’s largest cities. However, there are a number of emerging metropolitan areas that offer affordable housing and homes that are still appreciating in value.

Given how volatile the market has been over the last year since the pandemic, first-time home buyers may need additional help finding the best cities to meet their needs. Rocket Homes® has teamed up with BestPlaces.net to identify the 10 most affordable cities for first-time home buyers. These locations are exhibiting strong growth but have yet to reach their full potential, making them ideal for those buyers looking to score deals in housing markets that are up and coming.

Finding The Most Affordable Cities For First-Time Home Buyers

The researchers at BestPlaces.net used the following metrics to determine the rankings for the most affordable cities for first-time home buyers:

  • Cost per square foot
  • Recent home appreciation
  • Current home price
  • First-time home buyer programs and grants
  • Real estate taxes
  • Price-to-rent ratio
  • Cost of living
  • Ratio of home price to median household income

A filter was also applied to the results to ensure that our final choices have shown significant home price appreciation over the last year (indicating increasing demand) while excluding those metros with the very highest appreciation (indicating that those places may now be overpriced). To do this, we homed in on those metro areas with a home appreciation rate between 10% and 20% over the last 12 months.

1. Scranton, Pennsylvania

Lackawanna County Courthouse Square
  • Metro population: 553,885
  • Median home price: $137,800
  • Median square feet: 1,852
  • Recent home appreciation: 13.6%

Although the collapse of coal mining caused the city to decline in the 1950s, Scranton is now welcoming in a new crowd, as trendy lofts take the place of vacant industrial buildings and the local art scene flourishes. The revitalized metropolitan area is affordable and made even more attractive to those looking to put down roots thanks to the closing cost and down payment assistance Pennsylvania offers new buyers. With nine different initiatives to choose from, the state ranks in the top 10% of the country for its first-time home buyer programs and grants.

2. Owensboro, Kentucky

Owensboro Kentucky Bridge
  • Metro population: 119,440
  • Median home price: $138,000
  • Median square feet: 1,702
  • Recent home appreciation: 13.8%

Owensboro is a city that has been transformed by the development of its riverfront. Located on the Ohio River, Smothers Park is just one of the area’s 25 parks that make up nearly 8% of the city’s 19 acres. Not only does the metropolitan area offer first-time home buyers plenty of green space (and exciting new playgrounds), but it also provides housing that ranks in the top 15% of the country for its affordability. The median home price in Owensboro is 45.5% below the U.S. metro average of $253,384.

3. Brownsville, Texas

Brownsville Texas City Hall
  • Metro population: 423,163
  • Median home price: $120,900
  • Median square feet: 1,993
  • Recent home appreciation: 14.5%

With cost of living 26.3% below the national average, Brownsville is more affordable than 98% of the country. The city’s home price-to-rent ratio is just 10.3, meaning that it’s a place where it makes more sense to buy a home than it does to rent. While the median rent is 26.9% below the U.S. metro average, the median price of a home is actually 52.3% below the average. Therefore, more residents can afford homeownership and reap the benefits of living near the Gulf of Mexico, in a place that enjoys an average of 223 sunny days a year.

4. Decatur, Alabama

Decatur Alabama
  • Metro population: 152,603
  • Median home price: $153,200
  • Median square feet: 2,283
  • Recent home appreciation: 13.7%

Decatur is a place where first-time potential homeowners can get the most bang for their buck. With homes selling for just $67 per square foot, the area ranks in the top 10% of the country when it comes to offering buyers the opportunity to make the most of their housing budget. With unemployment at just 2.5%, Decatur has a lower unemployment rate than 99% of the country. The city ranks in the top 5% of the country for job growth, and the presence of strong job opportunities suggests that home prices are likely to continue appreciating.

5. South Bend, Indiana

South Bend Indiana
  • Metro population: 323,613
  • Median home price: $158,900
  • Median square feet: 1,727
  • Recent home appreciation: 13.8%

A 2017 redevelopment of downtown South Bend reimagined the streetscapes and pedestrian areas, making the city more walkable. The $21 million initiative not only brought more foot traffic to the urban area but also encouraged private investors to pump another $90 million into revitalization efforts. Rundown properties were demolished to make way for new developments and what was salvageable underwent major renovation. Thanks to the remarkable efforts, the area has seen significant appreciation in home values, which have increased 25% over the last 3 years and 44.4% over the last 5.

6. Winston-Salem, North Carolina

Winston Salem North Carolina Downtown Skyline
  • Metro population: 676,008
  • Median home price: $177,700
  • Median square feet: 1,970
  • Recent home appreciation: 13.3%

Winston-Salem has also seen a slew of new developments emerge, bringing new apartment buildings, hotels, retail spaces, art and convention centers, restaurants and parks into the downtown area. Over the last two decades, $1.5 billion worth of investments have gone into revitalizing the city, including a $60 million conversion of the R.J. Reynolds Building – the 1929 prototype of NYC’s iconic Empire State Building. Despite the gentrification, it’s still cheaper to buy a home in the metro area than it is to rent: Winston-Salem’s price-to-rent ratio is in the top 20% of the country.

7. Springfield, Ohio

Mausoleum In Fall Reflection
  • Metro population: 134,083
  • Median home price: $142,300
  • Median square feet: 1,459
  • Recent home appreciation: 13.8%

Two major draws of Springfield, Ohio are that it’s the midpoint between Columbus and Dayton and is more affordable than both larger cities. The city ranks in the top 10% of the country for affordability, with a cost of living that’s 21.7% below the national average. The area also offers newcomers affordable homes: The median home price is 43.8% below the U.S. metro average. Any first-time home buyers who have been priced out of hot seller’s markets this year will be happy to hear that, although inventory has been low, homes in Springfield are cheaper than 85% of the country.

8. Chattanooga, Tennessee

Aerial View Of Chattanooga Tennessee
  • Metro population: 565,194
  • Median home price: $203,100
  • Median square feet: 2,064
  • Recent home appreciation: 13.9%

Chattanooga may be a midsized city, but it has big potential as a center of technological innovation. Just over a decade ago, the government built a city-wide fiber optic network that provided the fastest internet service in the country. The city, which now offers residents 10-gig speeds, has become a start-up hub, and the community has created a digital-equity initiative to ensure that all residents are connected. By viewing internet access as a necessary utility, Chattanooga has pushed its economy into the future. As younger tech workers continue to move into the city, home values are likely to further appreciate.

9. Dayton, Ohio

River Scape View Of Dayton Ohio Skyline
  • Metro population: 807,611
  • Median home price: $155,000
  • Median square feet: 1,397
  • Recent home appreciation: 13.7%

The Dayton Arcade was considered the crown jewel of the city when it first opened in 1904, but the shift towards suburbanization led its doors to officially shutter in the 90s. After 3 decades of vacancy, the historic arcade with its glass-domed, 70-foot-tall Rotunda has been restored. The $90 million redevelopment has sparked an influx of new investments across the city to the tune of $1.5 billion – with another $500 million worth of projects already in the works. The excitement has reinvigorated demand in the metro area – and home values, which have appreciated by nearly 30% in the last 3 years, have begun to show it.

10. Huntsville, Alabama

Big Spring Park filled with Cherry Blossoms
  • Metro population: 471,824
  • Median home price: $222,400
  • Median square feet: 2,367
  • Recent home appreciation: 13.7%

Homes in Huntsville may not be the most affordable – though they are still 12.2% below the U.S. metro average – but first-time home buyers will find that they’re typically larger. The median square footage for a home in the area is 2,367, which is 25.4% larger than the U.S. metro average. Property taxes are also cheaper in Huntsville than they are in 90% of the country. For a home priced at the metro area’s median of $222,400, a resident would pay just $1,058 a year.

Methodology: Finding The Best Places For First-Time Home Buyers

To identify the best places for first-time home buyers, BestPlaces.net began by analyzing 383 major metropolitan areas, which are home to over 85% of all U.S. residents.

The team collected and analyzed statistics in eight key measures that give insight into each area’s home values, affordability, household income, taxes, cost of living, house price appreciation, and state programs that benefit first-time home buyers.

Each data metric was normalized and transformed to a common range of 0 – 100 points for the purposes of scoring and comparison. Weights were applied to each metric to reflect its level of importance in the study. The weighted scores for each metric were then summed and sorted to produce the final rankings.

A filter was applied to the results to ensure that the final choices have shown a home price appreciation rate over the last year that ranks in the top 10% – 20% of all U.S. metro areas. This range was selected to make sure that, in all ranked metropolitan areas, home values have been rising but have not yet peaked. 

Cost per square foot 	29% Home price – 1-year appreciation 	19% Home price – 3-year appreciation 	5% Home price – 5-year appreciation 	0% Median home price	14% Real Estate Taxes	10% First-time home buyer programs and grants	10% Price-to-rent ratio	5% Ratio of home price to median household income	5% Cost of living	5% Median square footage	0% Annual rent prices	0% Median household income	0%

Data on the unemployment rate and job growth also were sourced from the Bureau of Labor Statistics and represent March 2021 figures to provide readers with a clearer picture of these metropolitan areas. All mentions of the U.S. metro average refer to the average of all 383 U.S. metro areas analyzed for the study.

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    Rachel Burris

    Rachel Burris is a writer covering topics of interest to present and future homeowners, as well as industry insiders. Prior to joining Rocket Companies, she worked as an English teacher for the New York City Department of Education and a licensed real estate agent for Brown Harris Stevens. She holds a bachelor's degree in creative writing from Bucknell University, a postbaccalaureate certificate in psychology from Columbia University and a master's degree in English education from Teachers College, Columbia University.