First-Time Home Buyer Metro Affordability Report — Q3 2021

Price growth slowed a skosh and inventory ticked up slightly across the nation’s biggest metros in the third quarter. And while many potential first-time buyers have found their savings bolstered during the pandemic, those who haven’t squirreled away a surplus will find these modest improvements underwhelming.

National averages provide a good big-picture look at what’s happening in the housing market, and in the third quarter, that story is a slight improvement over the last: Prices were down a smidgen (1%) and inventory up 22% nationwide, quarter over quarter. But homes were listed at 5.3 times the median first-time home buyer income, when three times your income is a long-standing affordability rule of thumb.

To be sure, some first-time buyers are making a successful go of it, in spite of the strong seller’s market we’ve been in for more than a year. These inaugural buyers made up 34% of all buyers from July 2020 to June 2021, compared with 31% in the year prior, according to the National Association of Realtors’ 40th annual buyer survey.

Some buyers have likely found higher personal savings rates, increased work location flexibility and super-low interest rates over the pandemic fodder for staking a claim in this seller’s market. But for those potential first-timers who haven’t reaped similar benefits, the third quarter represented yet another where prices were too high and affordable homes scant.

Affordability across the nation’s biggest metros

Across the nation’s largest metro areas, affordability remained stable in the third quarter; homes were listed at 5.5 median first-time buyer income for the second quarter in a row. This is notably higher than one year ago, when homes were listed at 4.8 times first-time buyer income. Over the past year, prices have risen considerably, though that rate of growth has begun to level off.

Click here for a table containing affordability data for all 50 metros analyzed.

The most affordable metro areas in the third quarter, as usual, are in the Midwest and Rust Belt regions. They include Pittsburgh, where homes are listed at 3.1 times first-time buyer income, Cleveland (3.3), St. Louis (3.4), Buffalo (3.6) and Baltimore and Minneapolis (3.9).

The least affordable metro areas for first-time buyers are, once again, all in California. They include Los Angeles (12.1), San Diego (9.2), San Jose (8.3), Sacramento (7.6) and Riverside (7.4).