Here’s Where First-Time Buyers Are Finding Affordable Starter Homes

Would-be buyers of starter homes in larger cities will have the best luck in cities like Columbus, Indianapolis, Minneapolis-St. Paul and Nashville, while feeder cities in the Washington D.C., Indianapolis, Denver, and Raleigh metros are among the nation’s best overall for the property type. 

“In most big U.S. cities, it’s practically impossible to realize the American dream as a first-time homebuyer, including for millennials, who now make up the largest generational cohort interested in homeownership,” says StorageCafe’s Matei Idu in a new analysis. “There is, however, a silver lining, and that comes with urbanization and the rapid growth of suburbs and feeder cities that can now easily compete with gateway cities in providing premier lifestyles plus access to affordable homes.”

StorageCafe also notes that the enduring WFH trend has made it even more possible for would-be buyers to change cities, rather than being tied to a specific location. Idu notes that the size of new home builds is shrinking, suggesting buyers may be eschewing McMansions in favor for a more manageable footprint. StorageCafe’s analysis of home size from 2011 to 2020 reveals that the largest homes of the decade — roughly 2,687 square feet — were built in 2015, and hit an average of 2,480 for new-builds in 2020.

“Essentially, single family houses seem to have lost a bit more than a sizeable bedroom – typically 132 square feet – over the last five years or so,” Idu says.  And despite rising affordability challenges, the first-time homebuyer market is growing, constituting 34% of last year’s pool and up from 31% in 2020. And most of those buyers went for houses under 2,000 square feet.

Indiana is a great option for first-time buyers, with Fort Wayne standing out as the city offering buyers the best chance to nab a starter home. It’s followed in the top 10 by Columbia, Md.; Pittsburgh; Fishers, Ind.; Columbus; Carmel, Ind.; St. Paul, Minn.; Cary, N.C.; Manchester, N.H.; and Minneapolis.

Meanwhile, Denver’s feeder cities and Bakersfield in central California are the “only viable options” out west, while Florida and Ohio cities have the most active starter home buying markets in the country.

“Forced by skyrocketing prices, fluid job security and increased mobility opportunities, young people have started to show a remarkable willingness to relocate,” Idu says. “And millennials in fact represent the majority of homebuyers in no less than 11 of the top 20 cities. They should continue to capitalize on smaller emerging markets when looking for a starter home. Moving inland clearly tends to improve the best chances of getting a starter home. But more than that, it’s feeder cities and suburbs that give first-time homebuyers a real chance at owning property.”