Across the country, the number of homes for sale falls short of the still great demand, which has driven prices to exorbitant levels. Now, many potential homebuyers have to look for something affordable outside of their city or even their state.
The median price of an existing home — $350,300 in January — has increased year-over-year for 119 consecutive months through January 2022 (nearly 10 years), according to the National Association of Realtors. Meanwhile, the total housing stock fell by 16.5% over the same period.
As some people feel less connected to their current location (largely due to the increased flexibility of working from home during Covid-19), many are choosing to leave expensive areas in search of homes that will break the bank and not blow up.
According to a recent report by Redfin, in January nearly one in three buyers on their website were looking for an apartment in a metro area other than where they are currently located.
Forbes Advisor examined the average listing price in the 100 largest metro areas (which includes the capital and nearby suburbs, cities and smaller urban areas) to determine the 10 cheapest cities to buy a home in. The calculations also included the average down payment as a percentage of the total purchase price, per capita personal income, and average property tax.
Rust Belt Cities tops list of most affordable homes
The region with the cheapest housing is in the Rust Belt – the cities in the Midwest and Northeast that were once thriving industrial giants but have struggled financially since the 1980s. Now these cities have emerged as housing meccas. at affordable prices.
Cities like Youngstown, Toledo, and Akron, Ohio were among the cheapest areas, with average February list prices of $115,000, $128,400, and $147,450, respectively.
In the Rust Belt, however, property prices can rise later as big companies like Intel expand there. President Joe Biden referenced Intel's construction of a $20 billion semiconductor factory in Columbus, Ohio, during his State of the Union address on March 1.
Investors are already aware of the low purchase prices and economic potential in many Rust Belt cities.
"Investors are definitely moving to Ohio, and that's creating a donut hole of affordable housing," said Julie Heath, director of the Economic Center at the University of Cincinnati. "It's good that our economy is starting to recover, but we still don't have the supplies we need."
Ronald Black, a Keller Williams real estate agent in Youngstown, says motivated buyers shouldn't wait much longer. Black has sold as many as 60 homes to a single investor.
"There are investors who see homes for $60,000, $70,000, $80,000 and think they're cheap," says Black. "They come from expensive cities and buy houses for rent."
The 10 cheapest cities to buy a house
The following is a list of the cheapest cities to buy a home based on the average list price as of February 2022, according to Realtor.com.
Forbes Advisor also included the average down payment as a percentage of the average home price, according to data from ATTOM Data Solutions for Q3 2021; US Census Bureau Income Per Capita for 2020; and average property taxes paid in 2019 collected by the Fiscal Foundation.
1. Youngstown, Ohio
Average list price:115.000 $
Average entry as a percentage of the sales price:4,5%
Per capita personal income (2020):46.635 $
Average property taxes paid by county (2019):1.695 $
Youngstown, a city in northeast Ohio, is number one on the list of cheapest cities to buy a home. The median list price of a home in February was just $115,000 - far less than the median price of $350,300.
“Before the pandemic, the Youngstown real estate market was very stagnant,” says Black. "It wasn't uncommon for homes to be on the market for seven months - and now they're going in days. The area needed a shot in the arm."
Black sees many younger buyers in their 20s and 30s returning to Youngstown from larger cities and buying homes. The desire for more space coupled with low interest rates are the main drivers, which paints a similar picture across the country.
2. Toledo, Ohio
Average list price:128.400 $
Average entry as a percentage of the sales price:7%
Per capita personal income (2020):51.024 $
Average property taxes paid by county (2019):$ 2.354
Toledo, Ohio's fourth-largest city, had an average list price of just $128,400. Toledo, like much of Ohio, has seen its population decline, losing more than 16,000 residents in the past decade through 2020, according to the latest Census Bureau data.
Despite the population decline, Toledo ranked ninth among the most popular areas for Gen Z renters, with more than three million rental requests, according to an analysis by RentCafe. Toledo is home to the University of Toledo and the neighboring state of Bowling Green. It is also within 60 miles of over 30 other institutions of higher education.
3. Akron, Ohio
Average list price:147.450 $
Average entry as a percentage of the sales price:7,4%
Per capita personal income (2020):56.821 $
Average property taxes paid by county (2019):2.586 $
According to a recent report by the National Association of Realtors (NAR) and Realtor.com, Akron is among the top 10 most affordable housing markets for families of color. Akron's black families can purchase homes "roughly proportional to their income distribution," the report says.
The percentage of median local wages needed to pay major property expenses (including mortgage, insurance and taxes) for a mid-priced single-family home in Akron is 22%, according to Attom Data, which is below the recommended 28%. . Most financial experts estimate the maximum amount that buyers should spend.
Average list price:169.450 $
Average deposit as a percentage of the sales price:7,1%
Per capita personal income (2020):59.923 $
Average property taxes paid by county (2019):$ 3.219
Cleveland, the third largest city in Ohio, is one of the most affordable cities in the United States. However, this accessibility is attracting investors - something locals are trying to fight. A recent report by the Vacant and Abandoned Property Action Council (VAPAC) shows that investor activity has tripled, from 7.17% in 2004 to 21.1% in 2020.
Investor activity for single-family homes is heavily concentrated on Cleveland's east side, accounting for up to 46% of all purchases, where most of the black families now squeezed by prices reside.
"We believe that such activities are part of a larger legacy of persistent racial bias in the US housing market," the report said.
The Cuyahoga County Down Payment Assistance Program offers eligible low to middle income down payment assistance up to 10% of the purchase price of the qualifying home, or a maximum of $14,900.
5. Scranton, Pennsylvania
Average list price:182.400 $
Average entry as a percentage of the sales price:5,5%
Per capita personal income (2020):52.580 $
Average property taxes paid by county (2019):2.613 $
Not only are Scranton home prices well below the national average, homebuyers are also spending less of their paychecks on home construction.
The percentage of median local wages needed to pay major ownership expenses (including mortgage, insurance, and taxes) for mid-priced single-family homes in Scranton is 18.8%, according to Attom Data, which is down from 28%. recommended by financial experts is the most buyers should spend.
6. Syracuse, Nova York
Average list price:184.900 $
Average entry as a percentage of the sales price:2,3%
Per capita personal income (2020):58.919 $
Average property taxes paid by county (2019):4.087 $
Syracuse has the cheapest single-family homes in upstate New York, making it an attractive option for people looking to leave the pricier big cities for more space of their own. About 27% of renters looking for apartments in the Syracuse area were in New York City, according to Apartment List search data.
"Syracuse now has more investors and a lot more money than it did before the pandemic," says Kelly Loya, a realtor at Mytown Realty in Syracuse. “A lot of people are forced to look in smaller places and even in places they wouldn't normally look. Buyers need to be so patient now.”
7. Pittsburgh, Pennsylvania
Average list price:197.000 $
Average entry as a percentage of the sales price:5,8%
Per capita personal income (2020):63.675 $
Average property taxes paid by county (2019):$ 3.034
Despite Pittsburgh's shrinking population, per capita income continues to rise. Income for workers in the region increased 7% year-on-year in 2020, and property prices remained relatively low compared to wages.
Average down payment values in Pittsburgh are also quite low, at around 5.8% of the average selling price, which makes it easier for many newcomers to start owning their own home.
"Pittsburgh went under the radar for many years and now we've become a tech hub again," says Bobby West, a broker at Coldwell Banker in Pittsburgh. "My phone rings four to five times a week from people west of the Mississippi trying to move here."
Despite the interest in Pittsburgh, West says there are still upstart properties and sellers who prefer traditional buyers over investors.
8. Dayton, Ohio
Average list price:197.450 $
Average entry as a percentage of the sales price:5,4%
Per capita personal income (2020):51.618 $
Average property taxes paid by county (2019):2.579 $
Dayton is one of the few areas in the country where homes are still for sale for less than $200,000. The average down payment of just 5.4% of the purchase price of an inexpensive home is another advantage for first-time and newcomers. That down percentage on a $200,000 loan would only be $10,800 (excluding closing costs and other fees).
Lower real estate prices and greater affordability in Dayton helped former Los Angeles resident Emma Smales move to the area in December 2020 to take over her family business, Smales Pretzel Bakery. She paid $200,000 for a 4-bedroom home in McPherson Town and got several concessions from the seller, including a new roof.
Smales says Dayton's ready-to-move-in market starts at around $150,000, but there are repairmen that cost much less.
"Dayton is an area unlike many other places," says Smales. "Prices have gone up, but it's still a lot cheaper here than in big cities like Los Angeles."
9. Buffalo, New York
Average list price:199.450 $
Average entry as a percentage of the sales price:8,6%
Per capita personal income (2020):56.748 $
Average property taxes paid by county (2019):3.891 $
Buffalo, which has a growing population, attracts New Yorkers and other out-of-state residents with lower housing costs. About 45.7% of renters looking for an apartment in Buffalo currently live in New York City.
The City of Buffalo also has a subsidy program that provides up to $5,000 towards the home purchase price for qualified first home buyers, including anyone who has not owned a home within the last three years. This subsidy does not need to be repaid as long as the buyer keeps their home for the first five years after purchase.
10. Detroit, Michigan
Average list price:200.000 $
Average entry as a percentage of the sales price:7,7%
Per capita personal income (2020):48.788 $
Average property taxes paid by county (2019):$ 2.464
Detroit, which was the No. 1 cheapest city on the Forbes Advisor list last year, has slipped down the rankings after home prices in the region continued to rise. Single-family homes sold for an average of $225,900 in the fourth quarter of 2021, up more than 14% year-over-year.
However, unlike most of the country, which faces housing shortages, Detroit has many basic stocks. Erica Collica, associate realtor at Max Broock Realtors Detroit, says people in their 20s and 30s are moving to Detroit to buy affordable homes that are still in a big city.
"You can buy a 4,500-square-foot historic home for $245,000 in an up-and-coming area of town," says Collica. "There are so many affordable neighborhoods like Bagley and Island View that are only 10 minutes from downtown Detroit."