Florida dominates list of best markets for 1st-time homebuyers

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Palm Bay, Cape Coral and Tampa top WalletHub’s list of the best markets for first-time homebuyers. However, a closer look at the rankings shows first-timers may need to sacrifice quality of life for affordability gains.

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Although you’ll be hard-pressed to find a homebuyer that isn’t irked by elevated mortgage rates, scant inventory and climbing home prices, there’s no denying that first-timers are hardest hit by a volatile market.

However, WalletHub’s latest affordability study published on Tuesday reveals opportunities still exist for newbies — if they’re willing to be flexible.

The halfway point between Daytona Beach and West Palm Beach, Palm Bay edged out 300 other cities as the best place for first-time homebuyers to start their real estate journeys.

WalletHub data analysts graded cities on a scale of 0 to 100, with affordability, real estate market health and overall quality of living accounting for 33.33 points each. The 22 individual metrics within each category were then given full, double and triple weight.

Palm Bay received the highest overall score of 66.55, with an affordability score of 109 vaulting the 120,000-person city to the top of the list, despite a score of 3 for real estate market health and quality of life. Cape Coral (65.07), Tampa (64.4), Port St. Lucie (63.36) and Orlando (63.08) rounded out the top five; however, each market lags far behind on real estate market health and quality of life scores — driving home the sacrifices first-timers might need to make.

Kevin J. Boyle

“Homebuying can be an emotional decision, especially for first-time buyers. It is important to keep a business consideration balanced with the excitement of the first-time purchase,” WalletHub expert and Virginia Polytechnic Blackwood Department of Real Estate Director Kevin J. Boyle said in a written statement. “Their first home is not likely their last, and they should pick a home and an area where the resale value is likely to be sustained.”

Florida still reigns supreme for the lists broken down by city size, with Tampa receiving the best large-city score and Cape Coral receiving the best midsize-city score. However, a few different markets snatched the top five spots in each city-size list.

Surprise, Arizona (62.53), is the second-best small city for first-time buyers, and Henderson, Nevada (60.61), and Virginia Beach, Virginia (59.68), are the third and fourth-best large cities. Gilbert, Arizona (62.08), Boise, Idaho (61.70), and Chesapeake, Virginia (61.03), round out the top five for the midsize cities list.

WalletHub also broke out the scores for individual indicators, including housing affordability, cost of living, real-estate tax rate, rent-to-home price ratio, median home-price appreciation, property-crime rate and total home energy costs.

Springfield, Illinois, is the most affordable market, while Laredo, Texas, has the best cost of living. Although Honolulu has exorbitant home-sales prices, it has the lowest real-estate tax rate.

On the flip side, California was deemed the worst state for first-time buyers. San Francisco, Pasadena, Burbank, Los Angeles, Glendale, Santa Barbara, Santa Monica and Berkeley have a better quality of life and market health than its Florida competitors but falter in its affordability scoring.

Brad Segal

Berkeley has the worst score overall at 26.32, with an affordability score of 300 and real estate market and quality of life scores of 281. Santa Monica (30.57), Santa Barbara (31.81), Glendale (36.32) and Boulder, Colorado (40.56), round out the bottom five.

WalletHub’s team of experts said this year’s ranking shows the difficulty that awaits first-timer buyers in today’s market. Boyle and several others said this segment of buyers must focus on non-negotiables and learn to balance immediate needs with long-term goals.

“A primary consideration should be how long they intend to stay in the home,” University of Colorado Denver lecturer Brad Segal said. “If it is for less than five years, then think about amenities and services that meet their current lifestyle – a nearby collection of restaurants, shopping, recreational activities, and perhaps close proximity to work may all be important.”

“If it is for more than five years, then consider potential lifestyle changes over time – if raising a family is anticipated, the quality of schools, parks and trails, and family amenities may be more critical,” he added.

Email Marian McPherson

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