High home prices, mortgage rates make it tough to be a first-time homebuyer now. Here's why location matters

Abstract

A new Bankrate ranking found the Austin, Texas, metro area is the best for first-time purchasers, while the worst is Washington, D.C. The ranking of 50 metropolitan areas was based on affordability, which was given a 40% weight; job market, 30%; market tightness, 15%; and wellness and culture, 15%. More from Personal Finance:Some newlyweds face a 'marriage tax penalty'What to do if you can't keep up with car paymentsStates have about $70 billion in unclaimed assets Kansas City, Missouri, came in second in the ranking of best cities, followed by Raleigh, North Carolina; Minneapolis and Jacksonville, Florida. "Affordability is a challenge in Austin, but it's not as challenging as in a lot of the California markets or in places where wages just haven't kept up with home prices," Ostrowski said. First-time homebuyers now face several challenges: high home prices, high mortgage rates and limited inventory in many locations. "The affordability equation is difficult." Affordability is still the No. 1 challenge for first-time homebuyers, said Zillow senior economist Orphe Divounguy. "The best advice for first-time homebuyers is to look at those markets that are relatively more affordable," Divounguy said. "Look for markets where you're going to have more bargaining power." Zillow recently put out its own list of best metro areas for first-time homebuyers in 2023. Working with a mortgage professional and realtor can help first-time homebuyers get a sense of what is in their budget, he said.