This story originally appeared on SmartAsset.
Since March, mortgage rates have fallen steadily. Over the same period, Americans have saved more: Bureau of Economic Analysis data shows that although the personal saving rate fell from its record 33% in April, the August 2020 personal saving rate remained high, at 14.1%.
With mortgage rates at all-time lows and Americans saving more, now may be a good time for individuals and families considering homeownership to take a serious look at their options. Buying a home for the first time requires significant research and thought.
Even after qualifying for a mortgage and covering the down payment and closing costs, first-time homeowners must consider their comprehensive financial situation and whether they will be able to make the monthly mortgage payments.
First-time buyers may also want to consider certain city-specific factors, such as entertainment options, commute times and job opportunities. In this study, SmartAsset uncovered the best cities for first-time homebuyers in 2020.
To find the best cities for first-time homebuyers, we looked at data on the 200 largest U.S. cities. Complete data was available for 185 of those cities. We compared the 185 cities across four categories:
- Home market favorability. For our home market favorability category, we considered the price-to-rent ratio, five-year home value appreciation and state-level foreclosure rate.
- Affordability. Our affordability category includes the under-45 homeownership rate, down payment-to-income ratio, housing costs as a percentage of income and effective property tax rate.
- Livability. For our livability category, we considered the county-level concentration of dining and entertainment establishments, average commute time and violent crime rate.
- Employment. This includes the July 2020 county-level unemployment rate and the five-year change in median household income.
Data comes from the Census Bureau’s 2018 and 2013 One-Year American Community Surveys, Bureau of Labor Statistics and FBI, except where noted.
We ranked each city in every metric and found an average ranking and score for each category. We then calculated a final score by averaging the four category scores. The city with the highest cumulative score ranked at the top of our list, and vice versa.
Following are the best cities for first-time homebuyers.