Ten Great States for First-Time Homebuyers

Considerations for First-Time HomebuyersAs most people are all too aware, buying a home is a financial goal – likely the most significant for a large section of the populace – that has been delayed for many wannabe homeowner thanks to the recent recession. However, now that the economy continues to strengthen in 2015, many Americans have decided the time is finally right for them to buy their first home.

In a past post, Preparing for Homeownership, I noted that for many of us, a home will be the single largest purchase we will make during the course of our lifetime. Buying a home requires an understanding of all the factors that will impact a potential purchase and savvy management of finances to close the deal. I highlighted key actions such as saving an adequate amount for a down payment, determining how much of a mortgage payment could be afforded and accounting for new expenses (e.g. property taxes) in your budget.

Prior to doing all those things, however, perhaps the most important decision that will be made is where to live. The United States is a large country with lots of options! To see which states offer the best conditions for new homeowners, a recent study ranked the 10 states with the most growth in the number of first-time homebuyers, while maintaining lower levels of foreclosure rates, over the past 10 years.

Some highlights from the study:

  • Seven out of the 10 states in the study fall in the Northeast region of the United States, including the top three: 1. West Virginia, 2. New Hampshire and 3. Rhode Island
  • Arizona – my home state – rounded out the list at No. 10 as the only West Coast state in the contiguous United States, noteworthy for its low mortgage payments and the Home Plus Home Loan Program.
  • Washington D.C. has the highest median price of a home on this list with more than a half of a million dollars, but boasts one of the lowest foreclosure rates at 0.01 percent.

The detailed ranking and analysis for each state can be found at here.


Blogger-in-Chief here at RetirementSavvy and author of Sin City Greed, Cream City Hustle and RENDEZVOUS WITH RETIREMENT: A Guide to Getting Fiscally Fit.


  1. Methodology: States were ranked according to the increase in the portion of home buyers who were purchasing their first home when comparing 2003 to 2013 numbers reported by the FHFA, controlling for foreclosure rates reported by RealtyTrac. The states with the highest portion of first-time home buyers ranked higher, as did states with lower foreclosure costs, with the former weighted at a two-to-one ratio to the latter. These two factors contributed to a final score which determined the states’ rankings in GOBankingRates’ study of the Best States for First-Time Home Buyers.

    Interestingly, the reasons they gave had nothing to do with their index score. Basically, this is a trend study with some ex-post-facto crap reasoning built in. That said, it’s still fascinating.

    • Over the last couple of years, the time I have been running this blog, I have come across quite a few studies/surveys/reports that address the ‘best’ places to live, work, buy a home, etc. and there is often very little overlap. So much comes down to the factors being considered and the methodology. At the end of the day, these types of studies are most useful to the individual if the factors (e.g. tax rates) being considered are high on their list of priorities and they want to directly compare two or more of the possibilities. Thanks for stopping by adding your thoughts to the conversation, Hannah.

  2. I have to agree that I am a little shocked as well. The only reason the Midwest isn’t on there is because it is made up of farmland and factories. The latter of which has moved out of these areas in the last decade or so. Very surprised about the East coast choices though. I would have thought they would have been NY, maybe GA, the Atlanta area, etc. Very interesting.

    • Yep, it would be interesting to really dig down in the numbers and look at foreclosures in some the states that didn’t make the cut. Thanks for stopping by, Karen.

  3. Interesting list. I wonder why no Midwest states made the list? I think “State” is a really broad measurement. Breaking it down to “best metroplitan areas to be a first time homebuyer” would be more valuable for young professionals.

    • With respect to why no Midwest states – and only one from the West (my home state of AZ) – I was a little surprised myself. My understanding is that the study looked at two factors over a ten-year period: growth in the number of first-time home buyers and their ability to maintain lower levels of foreclosure rates. Agreed that breaking it down by metropolitan areas may have been more helpful. It may not be that helpful for someone looking for a home in a particular metropolitan area only to find out that the state’s numbers were largely driven by areas outside of the desired area. Thanks for taking the time to stop by, DC and kicking off the conversation.

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