Buying your first home has always been a sign of growing up and living the American dream.
But the rising cost of housing in many areas have put desirable large cities out of reach for potential homebuyers in their 20s and 30s as they contend with student loan debt and saving for a down payment.
“As Millennials reach the typical home buying age, they are coming into a tough housing market with low inventory and lots of competition,” said Zillow chief economist Svenja Gudell.So where can young Americans actually afford to buy a house?
Most of the best cities for first-time homebuyers are in the Southeast or Midwest, according to a study of the top 35 metropolitan areas by online real estate database firm Zillow.
Topping the list are two cities in Florida: Orlando and Tampa. Rounding out the top 5: Indianapolis, Las Vegas and San Antonio.
These markets were cited for having affordable homes, healthy inventory and stronger home value growth potential.
The most difficult areas for first-time buyers, not surprisingly, are West Coast markets.
A 5% down payment for a house in the San Francisco area would be larger than a 20% down payment in most of the top 10 best markets, the study found.
A separate report by Bankrate cited California as the toughest state for first-time homebuyers. Hawaii and New York came in second and third.
“Tight market conditions and unaffordably high prices really plague what many young Americans feel are the most desirable places to put down roots,” Bankrate.com analyst Claes Bell said in the study.
The best states: Iowa, Utah and Minnesota.
The biggest barrier to homeownership is saving for a down payment .
Seven of the top 10 metropolitan markets cited as the best by Zillow have a median home value that is lower than the national median home value of $196,500. That means they require less money for an acceptable down payment.
Here are the top ten best markets for first-time homebuyers and Zillow’s home value index for each:
1. Orlando, Fla.: $202,900
2. Tampa, Fla.: $183,300
3. Indianapolis, Ind.: $137,300
4. Las Vegas, Nev.: $219,200
5. San Antonio, Texas: $158,500
6. Pittsburgh, Pa.: $135,700
7. Atlanta, Ga.: $175,800
8. Detroit, Mich.: 138,700
9. Dallas, Texas: $205,300
10. Cleveland, Ohio: $132,400