These are 2021's best cities for first-time homebuyers

• Four of the top 10 best markets for first-time buyers, as determined by Realtor.com, are in the Midwest.
• While the pandemic has spurred strong demand for housing, it has also allowed for more flexibility in where people can live.
• Another survey of potential first-time buyers by Realtor.com found that 44% of millennials said they didn't have enough for a down payment.

Heavy competition in today's pricey housing market has sidelined some first-time buyers, especially in major metropolitan areas. These buyers usually make up about 40% of the market, but now it's less than a third, according to the National Association of Realtors. The majority are millennials, aged 25-34.

There is still hope for homeownership, however. While the pandemic has spurred strong demand for housing, it has also allowed for more flexibility in where people can live, which benefits those same first-time buyers.

So where are the best bets for them in 2021? Not surprisingly, the Midwest.

Four of the top 10 best markets for first-time buyers, as determined by Realtor.com, are in the Midwest. Bloomington, Illinois, leads the list. Iowa City, Iowa, ranked second, followed by Kalamazoo, Michigan; Great Falls, Montana; Eau Claire, Wisconsin; Savannah, Georgia; Schenectady, New York; Taylorville, Utah; Harrisonburg, Virginia; and Rapid City, South Dakota.

All of the top markets have median home prices below the current national median of $370,000. Kalamazoo, Michigan, has the lowest median home price at $155,000, while Taylorsville, Utah, has the highest at $350,000.

But it is not just about price and affordability. To determine the best cities, Realtor.com looked at home prices relative to local incomes, the share of 25- to 34-year-olds living in the market, the availability of homes for sale, job opportunities, distance to work, and amenities such as bars and restaurants. It also limited the rankings to one city per state.

"With 50% fewer homes on the market this year than last, the U.S. housing market is competitive for all buyers," said Danielle Hale, chief economist at Realtor.com. "First-time buyers are at a bigger disadvantage since they don't have the funds from a previous home sale to help with their down payment or compete with bidding wars."

Another survey of potential first-time buyers by Realtor.com found that 44% of millennials said they didn't have enough for a down payment. Part of that, however, may be that they are not aware of programs designed to help them.

"There are some great loan programs available just for first-time homebuyers that allow for as little as 5% down without mortgage insurance," said Jennifer Myers, a real estate agent with Dwell who often works with millennials and is one herself. "There are programs like this throughout the country and many first-time buyers qualify but just don't know about these awesome ways to make their first home more affordable."

If buying is out of the question, however, the best cities in which to find affordable, luxury rental apartments are mostly in the South, according to another study by RENTCafe, an apartment listing site. Georgia, specifically the Atlanta area, snagged the top spots. Cities in Alabama and South Carolina followed on the list.

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