California’s largest housing markets play a crucial role in shaping first-time homebuyer trends, even as newer regions gain popularity in national rankings, according to a recent analysis on first-time homebuying trends.
Although the national housing market continues to be challenging for first-time buyers, with affordability one of the biggest challenges, conditions are improving in some parts of the country, according to a study by Zillow.
To identify the cities that offer first-time buyers the best offers, Zillow analyzed the 50 largest metros using four key metrics:
- Rent burden: Share of median household income spent on typical rent
- Affordable listings for a median-income household
- Affordable listings per 100 renter households
- Share of the population aged between 29 and 43
While California metros were not featured in the top 10, the state was well represented in the broader data set, reflecting its continuing significance in the country’s housing market.
The following California cities were identified as some of the best markets for first-time homebuyers:
San Jose: Low affordability (23.2% rent burden), very limited inventory (0.2 listings per 100 renters), strong age demographics (41.7%)
San Francisco: Low affordability (25.9% rent burden), constrained inventory (0.4 listings per 100 renters), strong age demographics (38.4%)
Los Angeles: High affordability pressure (33.9% rent burden), very tight inventory (0.1 listings per 100 renters), strong age demographics (36.3%)
San Diego: High affordability pressure (29.8% rent burden), limited inventory (0.3 listings per 100 renters), solid age demographics (39.1%)
Sacramento: Moderate affordability (25.4% rent burden), limited inventory (0.7 listings per 100 renters), solid age demographics (35.8%)
Riverside: High affordability pressure (30.9% rent burden), modest inventory (1.3 listings per 100 renters), strong age demographics (38.2%)
Major cities, such as San Jose and San Francisco, reflect strong demand due to the competitive job markets and technology and innovation-led economies, reinforcing their appeal among homebuyers despite constrained supply and affordability concerns.
Other cities, like Los Angeles and San Diego, maintained their steady appeal among homebuyers, aided by lifestyle-driven demand and diverse economies.
With relatively more affordability among the other cities, Sacramento and Riverside emerged as key cities in the list, also due to their connectivity to major employment hubs.
Despite affordability being one of the biggest challenges in California’s housing markets, some of the state’s most expensive markets are beginning to soften, according to a recent affordability analysis. The share of income needed to afford a typical mortgage in some California cities is projected to decline by 2026-end, according to the study.
California’s housing market has been relatively stable, with many metros seeing fewer homes sitting unsold compared to the national average, according to a recent study.
The Bay Area continues to show market strength, with homes in San Jose, San Francisco, and Oakland experiencing the lowest shares of stale listings nationwide.
National First-Time Homebuying Trends
Most of the cities that featured in the top 10 list are located in the Sun Belt and the Midwest. According to Zillow, these markets offer a combination of affordable rent, better inventory, and less competition for budget-conscious buyers.
While some metros in the Sun Belt rank higher, mostly due to the improving inventory conditions, many Midwest metros have more affordable homes compared to homebuyer incomes, making homes more attainable for buyers.
The top 10 best markets for first-time buyers include:
- Jacksonville, Florida
- Birmingham, Alabama
- San Antonio, Texas
- Atlanta, Georgia
- Houston, Texas
- St. Louis, Missouri
- Detroit, Michigan
- Raleigh, North Carolina
- Baltimore, Maryland
- Louisville, Kentucky
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