What's the most important consideration when buying a new home? Affordability is definitely on the minds of most first-time homebuyers. But the competitive landscape and the potential for an increase in home value are also important factors. A recent study by SmartAsset looked at 180 of the largest metro areas in the U.S. and ranked them based on both affordability and factors that contribute to the long-term payoff of this major investment.
RECOMMENDED: This is the most affordable U.S. state to buy a home
According to the study, McAllen, Texas is the best city in the country for first-time buyers. Why? For starters, the median home price is just $204,499, roughly half the national average. That’s paired with relatively stable market conditions—home prices in McAllen are only expected to shift by 0.4-percent in the coming year. McAllen’s median home costs about four times the local median income, giving buyers some breathing room—a rare find in today’s overheated market. Not only that, but another study also recently ranked McAllen the number two most affordable place to live in the U.S.
While McAllen takes the crown overall, the Midwest is where to look for ultimate affordability for first-time homebuyers. Cities like Peoria and Decatur in Illinois lead the pack when comparing home prices to local income. Others worth watching include Cedar Rapids and Davenport in Iowa, Muncie in Indiana and St. Joseph in Missouri—all offering rock-bottom prices for budget-conscious buyers.
If inventory is your main concern (because good luck buying a home if there’s nothing to buy), head south. Cape Coral and Port St. Lucie in Florida boast the highest number of homes for sale per capita, giving first-time buyers more options and less competition.
Bottom line? You can’t change mortgage rates or national housing trends, but you can choose where to buy. Whether you’re after low prices, solid inventory or a stable market, 2025’s best bets are outside the usual hotspots.