- Chicago and Houston rank no. 5 and no. 8 on Zillow's list.
- The Zillow Home Value Index determined the median home value in America is $186,200.
- Indianapolis is the most affordable place to live for first-time buyers.
Zillow ranked Chicago and Houston no. 5 and no. 8, respectively, on its Top 10 Best Markets for First-Time Home Buyers list. The list was determined by waging the cost of homeownership against the cost of renting in various markets across the country. Other factors used have to do with median home values and competition within the market.
According to the Zillow Home Value Index (ZHVI), the median home value in America is $186,200. All of the top 10 markets Zillow listed fall under that value except for Chicago. The Windy City’s median home value, according to ZHVI, is $193,800.
The Zillow Home Value Index is the median estimated home value for a specific geographic area, and it includes the value of all single-family residences, condominiums and cooperatives. These values are generated regardless of whether the properties sold within a given period.
One of the other factors relating to competition has to do with the market for cash buyers being seen as competition. In the most attractive markets for first-time buyers, cash buyer competition is “high,” but inventory is also “high.” One of the exceptions on the list is Chicago, which has “high” available inventory and “low” cash buyer competition.
However, the facts don’t lie in terms of affordability when looking at the percentage of income-to-mortgage verses income-to-rent. And although Chicago’s median home value is $193,800, the percentage of monthly income for a mortgage payment is only 14 percent.
In Houston, the median home value is $172,100 with only 12.5 percent of income for the mortgage payment.
Zillow also listed the top 10 least affordable markets, which is to say the top ten markets where ZHVI is significantly higher than the national average.
San Jose, California, for instance, has a ZHVI of $956,500. The percentage of income to mortgage there is 42.6 percent. And it’s not even number one on the list: Salt Lake City, Utah takes the title spot.
The ZHVI of Salt Lake is $234,400 with 16.2 percent of monthly income for mortgage payment. However, what makes the top 10 worst markets for home buying is the low inventory availability.
To zoom out to the state level for the cities above, check out our breakdowns for Zillow data here: