Buying a home is always a major expense. But recently, with inflation, rising mortgage rates and prices increasing higher than wages, that expense has become greater, pushing homeownership out of reach for many people.
However, not all housing markets are created equal. Your housing dollar will go a lot further in some locations than others. If you are able to relocate or work remotely, it’s worth considering a move to an area where homeownership is more affordable. Let’s take a deeper look at the housing market, and cheap housing in particular. What are the most affordable places to live in the U.S. in 2023?
Key housing market data
In the past 20 years, wages have not kept pace with home prices. The median household income increased by only $6,005 between 2001 and 2021, from $64,779 to $70,784, and median home sale prices increased by more than $250,000 in that same time frame, according to data from the St. Louis Fed.
Comparing the data from 2013 to the most current numbers available makes it easy to see why homebuyers are feeling the pinch:
| 2013 | 2023 | Increase |
|---|
| Sources: U.S. Census Bureau, Freddie Mac, St. Louis Fed and Bankrate. 2023 numbers reflect the most recent data available. |
| Median household income | $52,250 | $70,784 | +$18,534 (+35.47%) |
| Median home price | $266,000 | $467,700 | +$201,700 (+75.83%) |
| Average 30-year fixed mortgage rate | 3.98% | 6.66% (as of February 13, 2023) | +2.68 |
Home prices have risen at more than double the rate of income. On top of that, current interest rates are significantly higher than they were in 2013. So, not only will homebuyers likely need to borrow more, borrowing will cost them more. It makes perfect sense, then, that the country’s most affordable housing markets are seeing growth.
Cheapest housing markets in the U.S.
A lot of factors go into whether a city is right for you. Cost is certainly a major component, but so is opportunity. “It’s important to compare the cost of living to the quality of life that the area and community provides,” says Aaron Robbins, an executive broker with Realty Executives of Hickory in Hickory, North Carolina. He adds that, while cheap housing costs have their place in the equation, “so do the local wages, the amenities nearby and the tax rates.”
This list represents the 10 cheapest cities in the U.S. to buy a house in, per a Realtor.com study from the fourth quarter of 2022. Beyond just low listing prices, each city has its own individual personality and culture. If you’re looking for an affordable place to call home, look no further.
1. Youngstown, OH
- Median list price: $149,900
- Median down payment: $29,980
- Median household income: $31,020
Topping the list is Youngstown, which sits close to the Ohio/Pennsylvania border, about halfway between Cleveland and Pittsburgh. While it has a history of steel production, the city’s downtown now houses start-up tech companies and the Youngstown Foundation Amphitheater, which hosts big-name concerts, festivals and more. The community enjoys both art and science museums and easy access to state parks, bicycle paths and nature trails.
2. Syracuse, NY
- Median list price: $217,250
- Median down payment: $43,450
- Median household income: $40,076
Located near the center of New York state, Syracuse is just south of Lake Ontario and adjacent to the Finger Lakes region, famous for its natural beauty and its many wineries. As the home of Syracuse University, with more than 20,000 students, it’s also very much a college town. SU athletics are popular, and the city boasts a thriving art scene too, with several museums, galleries and live music festivals as well.
3. Scranton, PA
- Median list price: $225,000
- Median down payment: $45,000
- Median household income: $54,279
Scranton — notably the home of fictional TV series “The Office” and real-life president Joe Biden — is located in northeastern Pennsylvania. While it was a heavy coal-producing town in the early 20th century, the city is currently going through a major restoration, with many historic buildings being redeveloped, and Census numbers show the population is growing. The city’s Montage Mountain ski resort is popular for winter sports, while also offering year-round fun with outdoor festivals and big-name concerts.
4. McAllen, TX
- Median list price: $270,000
- Median down payment: $54,000
- Median household income: $57,359
McAllen is a city of 142,210 at the southern tip of Texas, just over the border from Reynosa, Mexico and not far from the Gulf Coast. While originally an agricultural area, the past few decades has seen it grow into a thriving city with a growing economy. In addition, McAllen consistently ranks as one of the safest cities in Texas.
5. Little Rock, AR
- Median list price: $298,873
- Median down payment: $59,775
- Median household income: $53,565
Situated on the Arkansas River, Little Rock is the state’s capital and its most populous city. It’s an economic hub of the South, with Simmons Bank, Bank of the Ozarks and the financial brokerage Stephens Inc. all headquartered there. The city is also home to a University of Arkansas campus, the Wildwood Park for the Arts and the William J. Clinton Presidential Library and Museum.
6. Jackson, MS
- Median list price: $299,000
- Median down payment: $59,800
- Median household income: $35,070
The state capital of Mississippi, Jackson is set along the Pearl River, which runs south into the Gulf of Mexico — a location that has helped make it an economic center. It’s also a center of American history, as the home of the HBCU Jackson State University, the Mississippi Freedom Trail, the Mississippi Civil Rights Museum and more.
7. Indianapolis, IN
- Median list price: $300,000
- Median down payment: $60,000
- Median household income: $58,479
In central Indiana sits the capital city of Indianapolis. The metro area boasts a population of nearly a million, making it the most populated city on our list and third in the entire Midwest, behind only Chicago and Columbus, Ohio. Indianapolis has a lot going on: It’s home to multiple Fortune 500 companies, museums and universities, two major league sports teams — the Colts and the Pacers — and of course the famous Indy 500. The city has seen steady population growth in recent decades, and with all it has on offer combined with its affordability, it’s easy to see why.
8. Wichita, KS
- Median list price: $304,475
- Median down payment: $60,895
- Median household income: $56,293
Wichita is the largest city in Kansas. The Arkansas River and the Little Arkansas River converge at the city’s center, which sets the stage for many attractions, including the gorgeous Botanica gardens, the Wichita Art Museum and the Keeper of the Plains, an imposing 44-foot statue created by Native American Blackbear Bosin. The city hosts several events in the summer, with many venues for live music.
9. Columbia, SC
- Median list price: $308,900
- Median down payment: $61,780
- Median household income: $47,524
Columbia is the capital of South Carolina and the second most populated city in the state, behind Charleston. It is about halfway between Charleston and Charlotte and home to more than 10 colleges and universities, including the University of South Carolina. One of the city’s most prominent draws is the Riverbanks Zoo & Garden, which is on the National Register of Historic Places and welcomes a million visitors every year.
10. Augusta, GA
- Median list price: $311,575
- Median down payment: $62,315
- Median household income: $43,009
Augusta is famous all over the world, not for its affordable housing prices but for golf —specifically the Masters, one of the biggest professional golf championships, played each year at the Augusta National Golf Club. The city itself sits on the banks of the Savannah River in eastern Georgia, right along the South Carolina border. Non-golfers can enjoy the Augusta Riverwalk and Phinizy Swamp Nature Park, which offers several multiuse trails to hike and bike amongst wildlife.
Methodology
We developed our list of the 10 cheapest cities in the country to buy a home based on data from Realtor.com. Cities are ranked in order of median list price. For each city, we’ve also included median down payments (based on the standard 20 percent required by most conventional lenders) and median household income (based on Census Bureau data).
Other affordable housing options
If you can’t afford your dream house just yet, your most obvious choice may be to continue renting. There is government-sponsored help available in the form of federal rental assistance, which helps 10 million people (in 5 million households) afford housing. These programs include Housing Choice Vouchers, Section 8 Project-Based Rental Assistance and public housing.
Set on homeownership? While moving to a cheaper city may save on housing costs, there are many options beyond the traditional single-family home that can help you set down roots for less:
- Attached properties: If a detached single-family home isn’t within your budget, a condo or townhouse might be. With this sort of multi-family property, you own the unit itself, but typically share the costs of common areas within the building or community. Condos and townhouses also usually require significantly less maintenance, which can save you money if you aren’t particularly handy or don’t want to spend time mowing your lawn.
- Manufactured homes: Manufactured homes have increased in quality significantly over the last few decades. They averaged $108,100 in 2021, according to data from the Census Bureau, and they can be placed almost anywhere: You can buy your own land or rent a lot in a manufactured-home community.
- Prefab/modular homes: If you’re considering building a house, these options can be a cheaper, faster way to go. In contrast to traditional stick-built residences, with these houses, there’s some level of construction that takes place offsite. Then, either major components (in prefab homes) or entire sections (in modular homes) are trucked to the lot for assembly. Building a modular home costs an average of $270,000, according to HomeAdvisor — not counting the cost of buying the land.
- Tiny homes: Tiny homes are extremely small residences — typically 400 square feet or less — and since size does matter, they cost significantly less to purchase, ranging up to $180,000 on the high end. You can purchase land to put them on, erect them on a friend or relative’s land, or rent a small part of someone’s property.
FAQs
The cost of your homeowners insurance depends on various factors, including your location, home value, home size and previous insurance claim history. That said, some companies offer better deals than others. Compare rates for the cheapest homeowners insurance using Bankrate’s table.
One way to keep homebuilding cheap is by completing as much of the work as possible yourself. Taking construction classes at your local community college or even trying to get a job in the industry can help you learn and gain experience. However, since safety is crucial and building codes are complicated, you might want to hire a general contractor to oversee your homebuilding efforts. You could also consider building a prefab or modular home, which tends to be cheaper than traditional custom building.
Finding a cheap home for sale takes a lot of research and patience. You’ll want to get started by narrowing down the areas of the country you’re willing to move to, then the cities, then the neighborhoods. Focus on fixer-uppers, foreclosed homes and HUD homes in the area you want, as they’ll likely have the cheapest price tags. And enlist the services of a local real estate agent, who will know the market well and be able to find opportunities that you might not.
Housing prices tend to vary drastically from market to market, even within the same state. That said, the cheapest states to buy real estate in are often those experiencing economic or population declines. Rust Belt states like Pennsylvania, Ohio, Michigan and Indiana all have markets with affordable housing, as do many Southern states, like Alabama and Mississippi. In contrast, California is one of the most expensive places to buy a home in the U.S.
FAQs
Homebuyer.com data analysis indicates that, for first-time home buyers, June 2023 is a good time to buy a house relative to later in the year. This article provides an unbiased look at current mortgage rates, housing market conditions, and market sentiment.
Will 2023 be a good time to buy a house? ›
Homebuyer.com data analysis indicates that, for first-time home buyers, June 2023 is a good time to buy a house relative to later in the year. This article provides an unbiased look at current mortgage rates, housing market conditions, and market sentiment.
Will house prices go down in 2023 Texas? ›
While some areas may experience an increase in housing prices, others may experience a decline. In Dallas, TX, housing prices are expected to decrease by 0.1% as of April 2023, followed by a further decline of 0.3% in June 2023, but are projected to increase by 0.7% by March 2024.
Will home prices drop in Arizona 2023? ›
The Arizona housing market has been experiencing steady growth over the past few years, and 2023 looks to be no different. According to the recent report released by Zillow, the average Arizona home value is $409,196, which is up 4.3% over the past year.
Where is housing cheapest in the US? ›
1. West Virginia. With a Zillow Home Value Index of $146,578, West Virginia is the most affordable state to buy a house in the US. Despite its low home prices, the state boasts natural beauty and outdoor recreation opportunities, making it an attractive option for homebuyers on a budget.
Will house prices go down in 2023 usa? ›
Although home prices are expected to improve in the second half of the year, the California median home price is projected to decrease by 5.6 percent to $776,600 in 2023, down from the median price of $822,300 recorded in 2022.
Will rates go down in 2023? ›
When Will Interest Rates Go Down? First, we expect the Fed to pause its rate hikes by summer 2023 (the May hike was the last one, in our view). Then, starting around the end of 2023, we expect the Fed to begin cutting the federal-funds rate.
Is real estate a good investment in 2023? ›
In my opinion, real estate is one intelligent option to consider in 2023, as it often has excellent returns, tax advantages and provides diversification even in the face of a challenging economic climate. Real estate also has the potential to compound your investment.
Will mortgage rates drop in 2024? ›
Fannie Mae, Mortgage Bankers Association and National Association of Realtors expect mortgage rates to drop through the first quarter of 2024, by half a percentage point to about nine-tenths of a percentage point. Figures are the predicted quarterly average rates for the 30-year fixed-rate mortgage.
Will housing prices drop in a recession? ›
Will house prices go down in a recession? While the cost of financing a home typically increases when interest rates are on the rise, home prices themselves may actually decline. “Usually, during a recession or periods of higher interest rates, demand slows and values of homes come down,” says Miller.
It has become less affordable than ever to buy and rent in the Grand Canyon State. The Phoenix housing market is no exception. Median sale prices rose over 24% from January to October 2021. Meanwhile, the average price to rent in Phoenix is expected to reach $2,475 by 2028.
What happens when the housing market crashes? ›
Homeowners owe more on their mortgages than their homes were worth and can no longer just flip their way out of their homes if they cannot make the new, higher payments. Instead, they will lose their homes to foreclosure and often file for bankruptcy in the process.
What is the cheapest state to live in 2023? ›
1. Mississippi. Coming in as the cheapest state to live in in the United States is Mississippi with a cost of living index score of 83.3. It also has the lowest average housing costs in the nation at 33.7% below the national average.
What state is the most affordable to live in? ›
The three cheapest states to move to in terms of housing costs are: West Virginia, with an average price of $123,000; Mississippi, with an average price of $125,000; and Arkansas, with an average house price of 133,600. You can view the 10 cheapest states to move to below.
What US city has lowest cost of living? ›
In its report, Niche also ranked the cheapest places to live in the U.S. At the top of the list this year is Brownsville, Texas. Brownsville has been steadily rising in Niche's Lowest Cost of Living ranking over the past few years, placing number six in 2021, number three in 2022 and finally, number one in 2023.
Will 2024 be a good time to buy a house? ›
Housing Market Predictions for 2024
With mortgage rates declining faster than expected, home prices are likely to remain mostly flat throughout 2024.
What is the best date to close on a house? ›
If you need to be occupying your home by a certain date to save on rent, it's a much better deal to close at the end of the previous month (for example, January 30) instead of the beginning of the current month (February 1).
What will 30-year mortgage rates be in 2023? ›
But average 30-year fixed rates will likely remain somewhere in the 6% to 7% range throughout 2023. For homeowners looking to leverage their home's value to cover a big purchase — such as a home renovation — a home equity line of credit (HELOC) may be a good option while we wait for mortgage rates to ease.
Where will mortgage rates be in 5 years? ›
The predictions made by the various analysts and banks provide insight into what the financial markets anticipate for interest rates over the next few years. Based on recent data, Trading Economics predicts a rise to 5% in 2023 before falling back down to 4.25% in 2024 and 3.25% in 2025.
Will mortgage rates go down in 2023 2024? ›
Fannie Mae expects the 30-year fixed to ease to around 6.1% in the second quarter of 2023, before falling to 5.9% in the third quarter and 5.7% in Q4. And it gets even better than that. By the end of 2024, they expect the 30-year fixed to average 5.2%.
2023 is a balanced year for housing supply and demand. This is ideal for retail purchasers and rental property investors. No longer a “seller's” market. Rising interest rates raise the monthly mortgage payment, which reduces homebuyers and lowers property values.
How to make money in real estate in 2023? ›
- House Flipping. Fix and flips are one of the most popular methods of making money in the real estate market. ...
- Rental Properties. Another way to invest in real estate is to buy property directly. ...
- House Hacking. ...
- Real Estate Investment Trusts (REITs) ...
- Online Real Estate Crowdfunding Platforms.
Top 10 Issues Affecting Real Estate 2022-2023
- Inflation and Interest Rates.
- Geopolitical Risk.
- Hybrid Work.
- Supply Chain Disruption.
- Energy.
- Labor Shortage Strain.
- The Great Housing Imbalance.
- Regulatory Uncertainty.
'I believe by the end of 2023 we will see rates start to fall with a target of between 2.5 to 3 per cent in 2024. 'I believe if the base rate can get back to circa 2.5 per cent, then we will see rates hovering around that mark with a return to products that have not been seen in the mortgage industry for some time.'
How low will mortgage rates drop in 2023? ›
“We expect that 30-year mortgage rates will end 2023 at 5.2%,” the organization noted in its forecast commentary. It since has walked back its forecast slightly but still sees rates dipping below 6%, to 5.6%, by the end of the year.
How high will mortgage rates go in 2023? ›
“[W]ith the rate of inflation decelerating rates should gently decline over the course of 2023.” Fannie Mae. 30-year fixed rate mortgage will average 6.4% for Q2 2023, according to the May Housing Forecast. National Association of Realtors (NAR).
Is it better to have cash or property in a recession? ›
In addition, during recessions, people with access to cash are in a better position to take advantage of investment opportunities that can significantly improve their finances long-term.
What happens to my mortgage if the economy collapses? ›
Recessions and housing market crashes may cause your house's value to decrease. However, your set mortgage rates won't lower, meaning your monthly payments will be higher than your home's worth. While many may dip into their savings to help pay the steep bills, others may need outside assistance.
Who benefits in a recession? ›
In a recession, the rate of inflation tends to fall. This is because unemployment rises moderating wage inflation. Also with falling demand, firms respond by cutting prices. This fall in inflation can benefit those on fixed incomes or cash savings.
Will Phoenix become uninhabitable? ›
Risks from extreme heat, drought, flood, and fire are all increasing for Phoenix. Maricopa county, home to Phoenix, is one of six counties in Arizona at risk of becoming uninhabitable to humans in the next 20 to 40 years. More than 150 people died in 2016, 2017 and 2018 from the effects of heat waves in Phoenix.
Winner: Florida
Florida's cost-of-living index score beats Arizona's, at 103 to 106.9, respectively. Both states are slightly above the national average when it comes to cost of living.
Is it cheaper to live in Phoenix or Texas? ›
Which state is more affordable? In short, Texas. The cost of living index and median housing prices are lower in Texas than in Arizona, but that also depends on the neighborhood you are in.
Will housing market crash in 2023? ›
While there's a lot of uncertainty in the real estate market and economy, many experts believe a housing market crash in 2023 is unlikely.
Will houses be cheaper if the market crashes? ›
During a housing market crash, the value of a home decreases. You will find sellers that are eager to reduce their asking prices.
Should I sell my house before the market crashes? ›
Before a recession hits, home prices are typically at an all-time high. This means that selling your home before a recession will result in a higher profit between the purchase price of the real estate and the sale price, which can increase your capital gains taxes.
Where is everyone moving to in 2023? ›
Based on migration data from the U.S. Census Bureau, Americans are moving to Austin, Texas; Raleigh, North Carolina; Orlando, Florida; Dallas, Texas; and Phoenix, Arizona. The most moved-to cities are based on percentage increases in population since 2010.
What is the most expensive state to live in 2023? ›
Hawaii is the most expensive state to live in, with a cost of living index of 184. Massachusetts is ranked second, with a cost of living index of 149.7, followed by California at 137.6, and New York at 134.5.
Where is best to live in 2023? ›
10 World's Best Countries To Relocate And Live In 2023, According To A New Data
- New Zealand. What is this? ...
- Australia. Australia boasts a thriving economy based on market principles and is considered a prosperous nation. ...
- Netherlands. ...
- Germany. ...
- Finland. ...
- Norway. ...
- Switzerland. ...
- Canada.
Regarding affordability, the report indicates that Connecticut, Massachusetts, and New Jersey are the most affordable states with Arizona, Nevada, and Florida being the least affordable. The researchers came to this conclusion by using features such as credit score, mortgage debt, paid family leave, and median income.
Which state has the highest cost of living the highest? ›
1. Hawaii. Hawaii is truly a paradise, but it is also the most expensive state in America to live in. The cost of living in Hawaii overall is 86% higher than the national average, and the cost of housing in Hawaii is a jaw-dropping 207% above the national average.
Hawaii and California are the LEAST affordable places to live in the U.S as incomes fail to keep up with soaring property prices.
Where is the cheapest place to live out west? ›
West Coast State Affordability: Ranked Most to Least Affordable
| Rank | State | Population |
|---|
| 1 | Wyoming | 563,626 |
| 2 | Utah | 2,763,885 |
| 3 | Montana | 989,415 |
| 4 | Idaho | 1,567,582 |
5 more rowsAug 7, 2019
The Cost: “There are few places in the world where the cost of living is as affordable as it is in Ecuador,” says Stiteler. “You can easily live off $1,500 to $1,800 a month depending on location and lifestyle. You can own a home on a Pacific Coast beach or a condo with great views in the Andes for around $150,000.
How high will interest rates go in 2023? ›
So far in 2023, the Fed raised rates 0.25 percentage points twice. If they hike rates at the May meeting, it is likely to be another 0.25% jump, meaning interest rates will have increased by 0.75% in 2023, up to 5.25%.
What will interest rates be in 2023? ›
Mortgage rate predictions for 2023
| Housing Authority | 30-Year Mortgage Rate Forecast (Q2 2023) |
|---|
| National Association of Home Builders | 6.36% |
| Fannie Mae | 6.40% |
| Mortgage Bankers Association | 6.40% |
| Average Prediction | 6.35% |
2 more rows4 days ago
These organizations predict that mortgage rates will decline through the first quarter of 2024. Fannie Mae, Mortgage Bankers Association and National Association of Realtors expect mortgage rates to drop through the first quarter of 2024, by half a percentage point to about nine-tenths of a percentage point.
How long will interest rates stay high for? ›
'I believe by the end of 2023 we will see rates start to fall with a target of between 2.5 to 3 per cent in 2024. 'I believe if the base rate can get back to circa 2.5 per cent, then we will see rates hovering around that mark with a return to products that have not been seen in the mortgage industry for some time. '
What is the interest rate forecast for 2023 and 2024? ›
Both estimates are largely in line with fresh projections from officials in March. The Fed penciled in a 5-5.25 percent peak interest rate for 2023, after which officials see rates falling to 4.25-4.5 percent by the end of 2024.
What will 30 year mortgage rates be in 2023? ›
But average 30-year fixed rates will likely remain somewhere in the 6% to 7% range throughout 2023. For homeowners looking to leverage their home's value to cover a big purchase — such as a home renovation — a home equity line of credit (HELOC) may be a good option while we wait for mortgage rates to ease.
What will the Fed interest rate be at the end of 2023? ›
“Returning to mortgage rates of 3% or 4% is not going to happen, in my view,” says Yun, who points out that historically rates have been higher. The low rates of 2020 and 2021 were “unique” and those that got them were “lucky,” he says.
What is a good mortgage interest rate? ›
A “good” mortgage rate is different for everyone. In today's market, a good rate could be 6% for one borrower and 8% for another on the same day. To understand what a good mortgage rate looks like for you, get quotes from a few different lenders and compare them.
