Louisville and Lexington rank among top 25 cities for first-time homebuyers

By Hayley Robb, Building Kentucky

Lexington leads Louisville as a top city for first-time home buyers ranking 11 out of 163 of the largest cities in the U.S., according to SmartAsset.

Historically, first-time homebuyers have made up about 40% of all homebuyers in the U.S. However, the share of first-time homebuyers has declined over the past decade, staying within the mid-thirties range, according to the National Association of Realtors.

Researchers attribute this to the tight inventory and rising prices of homes across America. Not only do you have to be fast to secure a house in today’s market, but you have to name the right price, and probably higher too.

Ranking best cities for first-time homebuyers

SmartAsset, a client acquisition platform connecting consumers with financial advisors, recently compared 163 of the largest cities in the U.S. across four categories, including:

  • Home market favorability (price-to-rent ratio, five-year home value appreciation and foreclosure rate)
  • Affordability (under-45 homeownership rate, down payment-to-income ratio, housing costs as a percentage of income and effective property tax rate)
  • Livability (concentration of dining and entertainment establishments, average commute time and violent crime rate)
  • Employment (unemployment rate and five-year change in median household income)

How Kentucky cities ranked

Lexington, Kentucky fell just below the top 10 at no. 11, earning a 50.4 home market favorability score, 73.2 in affordability, 85.39 in livability, 68.23 in employment and 69.3 overall.

Louisville ranked no. 25 earning a 52.53 in home market favorability, 83.55 in affordability, 51.62 in livability, 59.87 in employment and 61.89 overall.

Nashville, Tennessee ranked no. 1 with Murfreesboro not far behind at no. 5. Both ranked particularly well in the employment category with young buyers looking for places with jobs. Another trend that emerged from the study was that first-time homebuyers may want to avoid larger cities. None of the top 25 cities have a population greater than 700,000.

For SmartAsset’s full list, visit smartasset.com/data-studies/best-cities-for-first-time-homebuyers-2021

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