Things aren’t looking much better for Americans in the market for their first home.
Homes were listed at prices averaging 5.6 times the typical first-time buyer income in the nation's largest metros in the first quarter of the year, according to a new analysis by NerdWallet that examined home affordability for first-time buyers across the nation and in the most populous metro areas for the past three years.
A rule of thumb is the price of the house value should be no more than three to five times your total household income, but that depends on how much debt you currently have. If you are completely debt-free, you can consider a home thats up to five times your total household income, Fidelity advises. Buyers with debt should aim lower -- around three to four times the total household income.
Just two metros in NerdWallet’s analysis had homes listed at less than three times the typical first-time buyer income. This is the second quarter in a row that Pittsburgh (where homes were listed at 2.5 times first-time buyer income) and Cleveland (2.9) had the “affordable” designation.
The biggest quarterly price increases were seen in midwestern metros that are usually on the more affordable side, including a 10% increase in list prices in Kansas City, and 7% increases in Cincinnati and Columbus, Ohio and Minneapolis, even after adjusting for inflation.
Low inventory is keeping prices high. While many homeowners are ready to move, they don’t want to lose the low-rate mortgages they locked in a few years ago on their current homes, the Wall Street Journal reports. This is keeping the supply of homes for sale unusually low and making the market more competitive and pricey than some forecasters expected.
Based on NerdWallet's report, these are the most affordable real estate markets for first-time home buyers.
1. Pittsburgh
- Median household income: $81,759
- Average list price: $205,798
- Affordability: 2.5x typical income of a first-time buyer
The median age of first-time home buyers is 36, according to the National Association of Realtors. The median household income includes householders ages 25-44, the range likely to include most first-time home buyers.
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2. Cleveland
- Median household income: $68,553
- Average list price: $200,834
- Affordability: 2.9x typical income of a first-time buyer
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3. Detroit
- Median household income: $71,886
- Average list price: $231,833
- Affordability: 3.2x typical income of a first-time buyer
4. Buffalo, N.Y.
- Median household income: $70,397
- Average list price: $233,794
- Affordability: 3.3x typical income of a first-time buyer
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5. Baltimore
- Median household income: $92,052
- Average list price: $331,373
- Affordability: 3.6x typical income of a first-time buyer
6. St. Louis
- Median household income: $76,795
- Average list price: $274,571
- Affordability: 3.6x typical income of a first-time buyer
7. Philadelphia
- Median household income: $85,016
- Average list price: $324,766
- Affordability: 3.8x typical income of a first-time buyer
8. Indianapolis
- Median household income: $75,973
- Average list price: $301,232
- Affordability: 4x typical income of a first-time buyer
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9. Chicago
- Median household income: $82,991
- Average list price: $342,598
- Affordability: 4.1x typical income of a first-time buyer
10. Hartford, Conn.
- Median household income: $90,396
- Average list price: $392,144
- Affordability: 4.3x typical income of a first-time buyer
11. Louisville, Ky.
- Median household income: $70,001
- Average list price: $302,367
- Affordability: 4.3x typical income of a first-time buyer
12. Birmingham, Ala.
- Median household income: $62,972
- Average list price: $274,673
- Affordability: 4.4x typical income of a first-time buyer
13. Cincinnati
- Median household income: $78,750
- Average list price: $352,978
- Affordability: 4.5x typical income of a first-time buyer
14. Milwaukee
- Median household income: $77,235
- Average list price: $356,759
- Affordability: 4.6x typical income of a first-time buyer
15. Minneapolis
- Median household income: $95,974
- Average list price: $436,838
- Affordability: 4.6x typical income of a first-time buyer
16. Columbus, Ohio
- Median household income: $76,331
- Average list price: $362,414
- Affordability: 4.7x typical income of a first-time buyer
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17. Raleigh, N.C.
- Median household income: $91,880
- Average list price: $450,287
- Affordability: 4.9x typical income of a first-time buyer
18. Houston
- Median household income: $73,058
- Average list price: $359,475
- Affordability: 4.9x typical income of a first-time buyer
19. Richmond, Va.
- Median household income: $78,515
- Average list price: $393,353
- Affordability: 5x typical income of a first-time buyer
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20. San Antonio
- Median household income: $68,986
- Average list price: $345,603
- Affordability: 5x typical income of a first-time buyer
21. Oklahoma City
- Median household income: $66,301
- Average list price: $347,520
- Affordability: 5.2x typical income of a first-time buyer
22. Virginia Beach, Va.
- Median household income: $72,118
- Average list price: $372,309
- Affordability: 5.2x typical income of a first-time buyer
23. Charlotte, N.C.
- Median household income: $77,173
- Average list price: $399,323
- Affordability: 5.2x typical income of a first-time buyer
24. Atlanta
- Median household income: $78,307
- Average list price: $404,751
- Affordability: 5.2x typical income of a first-time buyer
25. Washington, D.C.
- Median household income: $111,471
- Average list price: $586,689
- Affordability: 5.3x typical income of a first-time buyer
26. New Orleans
- Median household income: $59,591
- Average list price: $327,813
- Affordability: 5.5x typical income of a first-time buyer
The following cities come in at or just above the national average affordability of 5.6 times the typical income of a first-time buyer.
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27. Kansas City, Mo.-Kan.
- Median household income: $79,805
- Average list price: $445,048
- Affordability: 5.6x typical income of a first-time buyer
28. Jacksonville, Fla.
- Median household income: $69,242
- Average list price: $393,124
- Affordability: 5.7x typical income of a first-time buyer
29. Dallas
- Median household income: $76,256
- Average list price: $437,514
- Affordability: 5.7x typical income of a first-time buyer
30. Austin, Texas
- Median household income: $92,193
- Average list price: $537,134
- Affordability: 5.8x typical income of a first-time buyer
31. Tampa, Fla.
- Median household income: $69,628
- Average list price: $405,296
- Affordability: 5.8x typical income of a first-time buyer
Monthly median list price and list count figures are from monthly inventory data from the Realtor.com residential listings database as of May 2, 2023. See NerdWallet's full report and methodology here: First-Time Home Buyer Metro Affordability Report Q1 2023.
