Cities Where First Time Buyers Beat Investors — And Where Investors Still Win
The Federal Reserve is heading into its December 10 rate decision facing one of the most complicated economic environments in years. The U.S. economy is showing strong overall growth, but the labor market is clearly losing momentum — creating a difficult split for policymakers.
Hiring has slowed sharply in 2025 as companies react cautiously to President Trump’s new economic policies. Job losses in both June and August and a soft three-month hiring average of just 62,000 show the cooling trend. Yet at the same time, productivity is rising and broader economic growth remains solid. This imbalance — strong GDP but weak hiring — makes it harder for the Fed to decide whether policy should remain restrictive or begin easing.
The release of the long-delayed September jobs report only added more confusion. The economy added 119,000 jobs, more than double expectations, but prior months were revised lower and unemployment ticked up. Wall Street economists say these mixed signals could lead to a divided vote inside the Fed, with some officials pushing to hold rates steady and others supporting another cut.A new analysis from Neighbors Bank reveals a sharp divide across U.S. cities when it comes to who’s winning the competition for starter homes — first-time buyers or real estate investors. Nationally, first-time buyers purchased about 69% of entry-level homes last year, but the numbers look very different depending on local rules, especially around short-term rentals.
Denver stands out as one of the strongest markets for first-time buyers. Strict regulations limit short-term rentals to primary residences, reducing investor profits and keeping bidding pressure lower. Because of this, 84% of Denver’s starter-home purchases last year went to first-time buyers — even though home prices average around $495,000.
Miami is the complete opposite. Florida law prevents cities from restricting short-term rentals, allowing investors to freely convert homes into vacation rentals. That freedom gives investors a big advantage, and the results show it: 57% of Miami’s starter-home sales went to investors, with first-time buyers capturing just 43%, despite similar price levels to Denver.
Other cities where first-time buyers dominate include Seattle and Los Angeles, where strict STR limits and policies favoring owner-occupants make it harder for investors to compete. Both metros saw 81% of starter homes go to first-time buyers. Meanwhile, cities like Indianapolis and Dayton offer affordability and strong local programs that help owner-occupants purchase renovated or previously vacant properties — keeping investors at bay.
The biggest takeaway from the study is that home prices alone don’t determine who wins. Policy matters just as much, and sometimes even more. Two cities with nearly identical price points can produce completely different outcomes simply based on how they regulate short-term rentals or prioritize owner-occupants.
As the housing market approaches 2026, many first-time buyers are looking for metros where they stand a fair chance — not markets where investors consistently win. And for policymakers, the findings offer important lessons on how regulations can directly shape affordability and access for younger and first-time buyers trying to enter the market.
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