It’s no secret that the currently cut-throat housing market is frustrating many homebuyers. However, first-time homebuyers are facing the biggest challenges.

Built-In Challenges for First-Time Homebuyers

If the COVID pandemic has not been challenging enough, first-time homebuyers have almost implicit obstacles to overcome in our current overheated market.

Since first-time buyers are generally younger, their credit history and credit scores are generally less attractive to sellers.  Compared with older, more experienced workers/homebuyers, their job history is tends to be shorter; their income tends to be lower, and their savings for a home deposit and an emergency fund tend to be less.  Plus, first-time buyers are less likely than older, more experienced buyers to secure a loan or successfully compete in a bidding war.

The COVID pandemic and its impact on the housing market (low inventory, high prices, competitive bidding wars) have only amplified all these first-time buyer challenges.

NerdWallet’s Analysis of Home Market Impacts on First-Time Homebuyers

NerdWallet recently released its First-Time Home Buyer Metro Affordability Report.  This analysis indicates how the housing market has impacted first-time homebuyers in 50 of the largest cities during Q2 2021.

Not only has low inventory (down -48% from Q2 2020!) been difficult, to say the least, rising prices have been a nightmare for first-time buyers.

Experts generally suggest that buyers think of affordability in terms of three…if a buyer earns $100,000, that buyer would likely qualify to buy a $300,000 home.  BUT, in the 50 largest markets NerdWallet analyzed, list prices averaged 5.5 times the local median income of first-time buyers.

What’s Affordable and Where?

Here are the most and least affordable cities for first-time homebuyers, according to NerdWallet.  

Most Affordable Cities for First-Time Buyers – 2021 

            Median Income   Q2 List Price    Affordability Ratio Pittsburgh         $76,144      $270,226              3.5

St. Louis             $75,373     $261,947              3.5

Cleveland            $62,315     $226.418              3.6

Buffalo                 $65,447     $251,738             3.8

Hartford CT           $83,465     $322,355             3.9

Baltimore              $88,959     $322,355             3.9

Minneapolis           $92,071     $366,852              4.0

Louisville KY          $65,971      $277,346             4.2

Indianapolis           $67,627     $282,317             4.2

Columbus OH         $73,577      $310,496            4.2

Least Affordable Cities for First-Time Buyers – 2021

Denver                    $90,661       $595,013         6.6

Miami                      $65,952       $434,024         6.6

New York                 $95,136       $629,244         6.6

Salt Lake City           $85,813       $573,973         6.7

Riverside CA             $74,225       $523,861         7.1

Sacramento              $78,882       $595,058         7.5

San Francisco          $141,028      $1,075,156       7.6

San Jose CA             $153,381      $1,289,190       8.4

San Diego                 $91,499        $843,311         9.2

Los Angeles              $82,350        $1,072,201       13.0   

 Thanks to NerdWallet and The New York Times. 


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