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Updated: Jun 7, 2022

January 06, 2022

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Zonda ranks Richmond, Virginia, first for entry-level buyer opportunity.

2022 is expected to be another solid year for the housing market. Forecasts from Zonda and other top housing firms are calling for continued price appreciation, rising mortgage rates, and little relief in available housing inventory. Competitiveness for the desired product isn’t going anywhere either, further straining buyers not armed with pristine credit scores, sizable down payments, and bottomless budgets. To account for this reality, we have created a list of the top entry-level housing markets to watch in 2022.

Last year, our top markets list for 2021 was focused on infrastructure and accessibility as migration during the pandemic became a game-changer for some areas. This year, we went back to the basics highlighting affordability and emphasizing the importance of entry-level home shoppers.

Before diving into our ranking, we want to emphasize that housing affordability for entry-level and first-time buyers across the country has gotten extremely competitive at best and out of reach for some at worst. The markets we are highlighting for 2022 are no exception. This list is not intended to say entry-level buyers have it easy in these markets; rather, we are highlighting ones where some reasonable opportunities for cost-conscious buyers still exist.

To create our list, we wanted to capture the markets that offer the best opportunities for entry-level and first-time buyers among metros with a population of 1 million or greater. We created an index to guide the analysis. Our index is comprised of affordability trends, including:

  1. Zonda’s Affordability Ratio (ZAR). The ZAR looks at the percentage of households that can afford the median-priced home in each market looking at local incomes as well as potential buyers from top migration markets. This component accounts for interest rates by looking at monthly payments and doesn’t knock housing markets that have high home prices but also high incomes.

  2. Price appreciation compared with history. Home prices have skyrocketed across the country, but growth is relative, and perception of that growth is often based on a respective market’s history. Buyers in a market where home price appreciation is historically tame may be more sensitive to fluctuations in home prices than those who live in areas where bursts of price growth are not atypical. To account for this, we used 2021’s new-home entry-level price appreciation relative to the year-to-date price growth from 2016 through today.

  3. FHA loan accessibility. The Federal Housing Administration (FHA) offers loan options for borrowers with tarnished credit scores and/or minimal down payments. Higher FHA loan limits for 2022 were announced at the end of 2021, giving some buyers new financing options that were otherwise unavailable. To account for this change, our index included the share of new-home projects that fall under the new FHA loan limits.

  4. Homeownership rate. The current homeownership rate for those 35 and younger is telling of local housing attainability. A high homeownership rate captures the ability to convert the desire to own into reality. We found this statistic was complementary to the other real-time payment and price inputs.

The map below shows Zonda’s top entry-level markets for 2022, led by Richmond, Virginia; Indianapolis; and Chicago. Half of the markets on our 2022 list overlap with those on our 2021 list—Salt Lake City; Nashville, Tennessee; Raleigh, North Carolina; Indianapolis; and Jacksonville, Florida.


Home to Virginia’s capital, Richmond ranks No. 1 for entry-level buyer opportunities. With a population of roughly 1.3 million, Richmond is one of the smallest metros included in our analysis but ranks extremely high due to strong relative affordability compared with other markets and a large increase in the share of projects falling under 2022’s FHA limit.

The opportunities for entry-level buyers are not going unnoticed though. Redfin reported that among 44 metropolitan areas, Richmond had the highest bidding war rate with 80% of offers facing competition compared with 60% nationally in November. These bidding wars are putting pressure on some buyers who are finding Richmond has become very expensive relative to itself since the start of the pandemic. Still, on a relative basis nationally, Richmond looks great for entry-level buyers.

Richmond Stats:

  • Zonda Affordability Ratio (ZAR) of 75%

  • Millennial homeownership of 56%

  • 83% of active projects will fall under the new FHA loan limit

  • New Home Pending Sales Index (PSI) down 16% year over year but up 22.6% from 2019

  • The average entry-level new home costs $316,000, up 12% YOY

What Our Experts Say:

Ben Sage, Zonda’s senior vice president of advisory and Mid-Atlantic expert, thinks Richmond has grown in appeal lately because of its affordability advantage compared with the D.C. metro. He states, “The D.C. area scores well with remote work potential, so people can have jobs based in D.C. while living in the more affordable Richmond metro. In terms of lifestyle, some might describe the downtown area as trendy and fast paced. Virginia Commonwealth University is a very reputable school of 20,000-plus undergrads abutting downtown Richmond, so there are plenty of amenities appealing to younger generations (art galleries, concert venues, restaurants, etc.).”


Indianapolis ranks second on our list. Indianapolis has been one of the Midwest’s best-performing new-home housing markets throughout the pandemic, driven by a swift local economic rebound; the implied unemployment rate in Indianapolis for November is 3% compared with 4.2% nationally. The market is currently selling at 2.6 homes per month per community on average, over one more per month than the other Midwest markets on our list. Like Richmond, Indianapolis has a strong combination of relative affordability, high millennial homeownership rates, and FHA benefits.

Indianapolis Stats:

  • Zonda Affordability Ratio (ZAR) of 75%

  • Millennial homeownership of 57%

  • 77% of active projects will fall under new FHA loan limit

  • New Home PSI is up 21% year over year and up 100.9% from 2019

  • The average entry-level new home costs $270,000, up 18% YOY but still the least expensive market in our Top 10

What Our Experts Say:

Indianapolis is no longer the Midwest’s best-kept secret, evidenced by strong in-migration and housing demand. In fact, affordable housing and general low cost of living makes Indianapolis a top destination for entry-level and first-time home buyers. “The investment in downtown’s Circle Center, sports facilities, and recreation has more than paid off—luring both businesses and young professionals alike. Several Fortune 500 companies are located in Indianapolis, along with four university campuses that attract students and serve as a deep talent pool for local businesses,” explains Danielle Leach, Zonda’s vice president of consulting and Midwest expert. “Health care, life sciences, and biotech are major sectors of the local economy, with Eli Lilly and Roche Diagnostics being top employers. Indianapolis is home to two major league sports clubs and several museums, including The Children’s Museum of Indianapolis, the largest of its kind in the world.”


Chicago ranks third and is the largest metro area on our list with roughly seven times the population as our No. 1 market. Chicago is ranked 10th in the world for having the most company headquarters, with offices spread across the metro. In fact, Chicago is a unique market with its mix of developed and desirable urban areas as well as suburban sprawl allowing different lifestyles and locales for remote work while offering buyers a wide variety of housing options at different price points.

Chicago, like many big cities, has extremes in home prices, offering very expensive luxury homes to dated and rundown resale homes. As a result, Chicago’s ZAR is higher than many would attest on the ground. Those looking for a desirable home in a good neighborhood with excellent schools will find the market increasingly expensive.

Chicago Stats:

  • Zonda Affordability Ratio (ZAR) of 76%

  • Millennial homeownership of 55%

  • 66% of active projects will fall under new FHA loan limit

  • New Home PSI is down 10% year over year but up 49.1% from 2019

  • The average entry-level new home costs $291,000, up 11% YOY

What Our Experts Say:

Chicago has big-city appeal, offering diversity in people, culture, and the workforce, according to Zonda’s Leach. “Chicago is considered one of the world’s topmost global financial centers and home to JPMorgan Chase and Chicago Board Options Exchange. Top global employers such as Deloitte, Mayer Brown, and Aon Hewitt lure young professionals and employ them with high incomes. Two major airports anchor the market, adding numerous local jobs and serving as key domestic and international transportation and telecommunication hubs. McDonald's, United Airlines, Boeing, Conagra, and numerous other companies are headquartered in the Chicago market. In addition, the market continues to lure headquarter offices given the wide range of available talent from graduates from the numerous local universities,” says Leach. “It’s a cool place to live with numerous sports teams, museums, and recreational opportunities.”


The third Midwest market in our top five, Cincinnati, comes in at No. 4. Cincinnati is the third-largest metro area in Ohio and provides immense entry-level opportunity due to strong relative affordability and millennial homeownership rates. Beyond offering relatively reasonable home prices, U.S. News & World Report ranks Cincinnati as the best place to live in Ohio. Cincinnati offers residents a wide range of things to do from museums to a bustling waterfront and zoological activities. Further, Cincinnati is home to professional sports teams like the Bengals, Reds, and FC Cincinnati.

Cincinnati Stats:

  • Zonda Affordability Ratio (ZAR) of 75%

  • Millennial homeownership of 57%

  • 55% of active projects will fall under new FHA loan limit

  • New Home PSI is down 9% year over year but up 4.9% from 2019

  • The average entry-level new home costs $287,000, up 16% YOY

What Our Experts Say:

“Cincinnati has blossomed into a cool, hip place to live that attracts Midwesterners as well as people from other U.S. regions seeking affordability,” explains Leach. “It’s known for its great culinary scene, world-renowned arts, and sports teams. Several Fortune 500 companies are headquartered in Cincinnati, such as Procter & Gamble, The Kroger Co., and Fifth Third Bank. The low cost of living is a draw for entry-level and first-time home buyers.”


Jacksonville, the lone Florida market, rounds out our top five. The housing market in Jacksonville has been extremely strong throughout the pandemic, evident by Zonda’s New Home Pending Sales Index, which is up 75% from solid 2019 levels. In addition to strong millennial homeownership and solid FHA benefits, Jacksonville provides a unique lifestyle compared with the other top markets on our list. Beach lovers can enjoy access to coastal towns in areas like Neptune Beach, Amelia Island, and Little Talbot Island State Park while living in great weather nearly year-round and a low tax environment.

Jacksonville Stats:

  • Zonda Affordability Ratio (ZAR) of 65%

  • Millennial homeownership of 55%

  • 67% of active projects will fall under new FHA loan limit

  • New Home PSI is down 3% year over year but up 74.5% from 2019

  • The average entry-level new home costs $292,000, up 21% YOY, the largest increase in our top five markets

What Our Experts Say:

Jacksonville tends to fly under the radar compared with other large metro areas in Florida (Miami, Tampa, Orlando), but the robust market offers first-time home buyers a significant value. “Jobs are plentiful, the unemployment rate is one of the lowest in the state, and the metro area includes some of the top-rated school districts, including No. 1 St. John’s County,” explains Kristine Smale, Zonda senior vice president of advisory and Florida expert. “The cost of living is 5% below the national average, and traditional Southern hospitality welcomes newcomers. A variety of housing options are available, and local developers maximize the desirable natural setting with a plethora of amenity options for the outdoor enthusiast (bike trails, kayaking, swimming, etc.). While prices are rapidly increasing across the country and within Jacksonville, four of the top 10 best-selling new home communities have an average base price less than $300,000—an appealing prospect for the first-time buyer and well below the FHA loan limit floor of $420,000.”

Charlotte, Raleigh, Salt Lake City, Detroit, and Nashville round out our top 10 entry-level markets for 2022. Diverse employment opportunities, evolving economies, entertainment options, and relative housing affordability add to the desirability of these metros and support continued growth in 2022.


Charlotte Stats:

  • Zonda Affordability Ratio (ZAR) of 69%

  • Millennial homeownership of 55%

  • 56% of active projects will fall under new FHA loan limit

  • New Home PSI is down 2% year over year but up 35.1% from 2019

  • The average entry-level new home costs $328,000, up 17% YOY

What Our Experts Say:

Charlotte offers a combination of big-city living at relatively affordable home prices and a cost of living that enables the city to attract first-time home buyers. Local expert and vice president of advisory Shaun McCutcheon adds, “There are a multitude of housing options at entry-level price points, from resales in central parts of the city to townhomes in infill locations as well as single-family homes in outlying locations. Further, the red-hot multifamily market and rising rents (up over 16% in the past year) have pushed many renters to become first-time buyers in Charlotte.”


Raleigh Stats:

  • Zonda Affordability Ratio of 67%

  • Millennial homeownership of 53%

  • 64% of active projects will fall under new FHA loan limit

  • New Home PSI is up 0.3% year over year and up 79.3% from 2019

  • The average entry-level new home costs $307,000, up 15% YOY

What Our Experts Say:

Although home prices and the cost of living is higher than other areas of the Carolinas, Raleigh benefits from higher-paying jobs and a diverse economy. “Raleigh has an educated population base with incomes that are significantly higher than the U.S. median, which is appealing to the entry-level and first-time home buyer segment, attracting buyers locally from the world-class university systems as well as drawing from much more expensive markets like New York and San Francisco,” says McCutcheon.

Salt Lake City

Salt Lake City Stats:

  • Zonda Affordability Ratio (ZAR) of 58%

  • Millennial homeownership of 60%65% of active projects will fall under new FHA loan limit

  • New Home PSI is down 19.3% year over year but up 12.3% from 2019

  • The average entry-level new home costs $388,000, up 21% YOY

What Our Experts Say:

The Greater Salt Lake market has been a relatively affordable market for many years, which has attracted numerous buyers from within the state and out of state. “When COVID hit, the resulting lifestyle changes from the pandemic completely changed the dynamic of the local market, mainly because local home prices were attractive to out-of-state buyers,” explains Eric Allen, Zonda’s Utah specialist and senior vice president of advisory. “The Greater Salt Lake market, like many others, is struggling to keep producing entry-level product at an affordable price. However, we are seeing builders pivot and produce more townhomes in the market and building in more rural areas to produce affordable product. This market has been primarily a single-family home market; however, nearly 38% of our new-home production is for attached product. This product has been well received, and we expect to see more of this product built in the years to come in order to assist in providing attainable homes for entry-level buyers.”


Detroit Stats:

  • Zonda Affordability Ratio (ZAR) of 73%

  • Millennial homeownership of 62%

  • 50% of active projects will fall under new FHA loan limit

  • New Home PSI is up 3% year over year and up 48.2% from 2019

  • The average entry-level new home costs $314,000, up 10% YOY

What Our Experts Say:

Detroit is big on cars, music, and attracting new businesses. “Given revitalization efforts over the past few years, new businesses have been finding their way to Detroit’s downtown and contributing to job gains in finance, health care, and tech,” explains Leach. “The local economy is largely driven and anchored by automobile manufacturing. That said, Detroit is considered a top five U.S. financial center given all four major accounting firms are headquartered there. Detroit serves as a major hub for transportation and employment in aviation, rail, truck, and ship docking facilities. In addition, Detroit is emerging as a tech hub with new offices in the market for Google, Microsoft, and Pinterest. Gains in the tech sector bring the ‘it’ factor to the city and lure entry-level and first-time home buyers.”


Nashville Stats:

  • Zonda Affordability Ratio (ZAR) of 64%

  • Millennial homeownership of 55%

  • 70% of active projects will fall under new FHA loan limit

  • New Home PSI is up 16% year over year and 25% from 2019

  • The average entry-level new home costs $292,000, up 6% YOY

What Our Experts Say:

Nashville’s dynamic lifestyle proposition, which includes diverse entertainment and cultural amenities, along with its relative housing affordability and modest cost of living, has allowed the city to attract a tremendous number of new residents from other markets across the country. “Consistent with other Sun Belt markets, much of this in-migration and purchasing power has arrived from more expensive major metros like Los Angeles, Chicago, and New York, and the momentum of this trend has rapidly accelerated as a result of greater flexibility in work approach and location,” explains Andrew Wilson, Zonda principal of advisory and local expert. “The metro’s diverse economy fueled by both large corporate relocation and expansions and organic growth is a distinct draw, particularly for highly educated young professionals. This collective population boon has flooded the market with prospective buyers at a time when supply is diminishing, putting upward pressure on pricing. Local prices are still relatively affordable but continue to climb.”

While some potential buyers were unable to secure a home during the feverish housing markets of 2020 and 2021, many are entering 2022 with more hope. Our top markets for 2022 capture those that will provide the most opportunity to the entry-level and first-time buyer segments for the new year; however, the home buying process will still feel daunting given the supply-and-demand dynamics and current home prices. The best-qualified buyers will keep their advantage, but entry-level home shoppers should be able to find a home with a reasonable mortgage payment in 2022 with some patience and flexibility.

Nik Scoolis, manager of housing economics at Zonda, co-authored this article.

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