Many people are surprised to see that the demand for houses in almost every real estate market keeps getting stronger, even with everything going on in the world we live in.
There are several reasons why housing prices keep rising, including the multiple revenue streams of income rental property generates, unique tax benefits, and interest rates still historically low.
However, just because prices for homes are high in many markets, that doesn’t mean you should overpay for a rental property that may end up under-delivering.
In this article, we’ll review what some of the foremost experts have to say about where to find the cheapest housing markets today. Each publication looks at different data, allowing you to compare and contrast to find the best real estate market for your investment strategy.
Cheapest states in which to buy a house
According to World Population Review, the 10 cheapest states to buy a home in are:
1. Mississippi- Median price: $114,500
- Median price per square foot: $77
- Effective property tax rate: 0.81%
- Median price: $115,000
- Median price per square foot: $78
- Effective property tax rate: 0.59%
- Median price: $123,300
- Median price per square foot: $82
- Effective property tax rate: 0.63%
- Median price: $130,900
- Median price per square foot: $87
- Effective property tax rate: 0.90%
- Median price: $135,300
- Median price per square foot: $93
- Effective property tax rate: 0.86%
- Median list price: $135,400
- Median price per square foot: $86
- Effective property tax rate: 0.86%
- Median price: $137,200
- Median price per square foot: $86
- Effective property tax rate: 0.42%
- Median price: $140,000
- Median price per square foot: $91
- Effective property tax rate: 1.58%
- Median price: $142,300
- Median price per square foot: $95
- Effective property tax rate: 1.56%
- Median price: $145,400
- Average price per square foot: $96
- Effective property tax rate: 1.41%
Cheapest housing markets 2022
In this article, the Roofstock team identified 25 states with the cheapest home prices. The report compiles home prices, 1 and 5-year price changes, median rent, and the cheapest cities to buy a home within each state. Here's a list of the top 10 states from that report:
1. West Virginia- Median home value: $122,342 (Zillow)
- 1-year price change: 9.7% (Zillow)
- 5-year price change: 23.9% (Zillow)
- Median home value: $151,190
- 1-year price change: 12.6%
- 5-year price change: 30.2%
- Median home value: $161,570
- 1-year price change: 15.6%
- 5-year price change: 38.1%
- Median home value: $162,409
- 1-year price change: 14.6%
- 5-year price change: 36.5%
- Median home value: $176,499
- 1-year price change: 11.4%
- 5-year price change: 28.8%
- Median home value: $180,024
- 1-year price change: 13.8%
- 5-year price change: 41.7%
- Median home value: $183,101
- 1-year price change: 16.0%
- 5-year price change: 43.0%
- Median home value: $190,409
- 1-year price change: 15.0%
- 5-year price change: 40.0%
- Median home value: $192,352
- 1-year price change: 16.0%
- 5-year price change: 50.2%
- Median home value: $199,541
- 1-year price change: 10.5%
- 5-year price change: 20.9%
Interested in digging deeper into the housing markets you’ve seen so far?
The Roofstock investment property marketplace is a great way to learn what the current cap rates and rental incomes are in each market.
Most affordable cities to live in
Extra Space Storage created a list of the most affordable cities to live in, based on budget-friendly housing, job opportunities, low cost of living, and great amenities.
1. Buffalo, NY- Cost of living: 17% below national average
- Median family income: $33,119
- Median home sale price: $72,600
- Median rent: $710
- Cost of living: 1% above national average
- Median family income: $55,599
- Median home sale price: $178,000
- Median rent: $966
- Cost of living: 1% below national average
- Median family income: $45,215
- Median home sale price: $142,600
- Median rent: $888
- Cost of living: 13% below national average
- Median family income: $48,088
- Median home sale price: $119,800
- Median rent: $775
- Cost of living: 6% below the national average
- Median family income: $47,489
- Median home sale price: $135,900
- Median rent: $826
- Cost of living: 21% below the national average
- Median family income: $36,975
- Median home sale price: $93,700
- Median rent: $842
- Cost of living: 5% below the national average
- Median family income: $49,891
- Median home sale price: $174,600
- Median rent: $902
- Cost of living: 12% below the national average
- Median family income: $50,070
- Median home sale price: $142,700
- Median rent: $793
- Cost of living: 10% below the national average
- Median family income: $50,827
- Median home sale price: $139,800
- Median rent: $819
- Cost of living: 12% below the national average
- Median family income: $48,183
- Median home sale price: $121,100
- Median rent: $882
- Cost of living: 3% below the national average
- Median family income: $45,874
- Median home sale price: $172,100
- Median rent: $983
Most affordable for average-income earners
Forbes ranked the top 10 most affordable housing markets for people with average incomes. The report compares the median sales price of a home in Q3 2021 to the percent of annualized wages needed to buy, based on a 20% down payment and a debt-to-income (DTI) ratio of less than 28%:
1. Macon, GA- Median sales price: $104,750
- Annual income needed to buy a home: $19,471
- Annualized wages to buy: 11.40%
- Median sales price: $124,950
- Annual income needed to buy a home: $28,749
- Annualized wages to buy: 12.50%
- Median sales price: $155,000
- Annual income needed to buy a home: $30,949
- Annualized wages to buy: 12.80%
- Median sales price: $132,000
- Annual income needed to buy a home: $23,568
- Annualized wages to buy: 12.90%
- Median sales price: $138,500
- Annual income needed to buy a home: $24,274
- Annualized wages to buy: 13.10%
- Median sales price: $175,000
- Annual income needed to buy a home: $31,789
- Annualized wages to buy: 13.20%
- Median sales price: $125,500
- Annual income needed to buy a home: $24,390
- Annualized wages to buy: 13.40%
- Median sales price: $151,770
- Annual income needed to buy a home: $24,817
- Annualized wages to buy: 13.50%
- Median sales price: $173,000
- Annual income needed to buy a home: $28,663
- Annualized wages to buy: 14.60%
- Median sales price: $180,000
- Annual income needed to buy a home: $31,515
- Annualized wages to buy: 14.60%
Best cities with plenty of jobs and cheap housing
Cheap housing and good jobs. What more could a real estate investor ask for?
GO Banking Rates recently listed the 50 top U.S. cities where people can live a decent, affordable life. The report analyzed factors such as median home listing price, market rent, unemployment rate, median household income, and livability score for each city. Here are the 5 cities that made the top of the list:
1. Amarillo, TX- Typical home value: $152,694
- Typical rent: $872
- Unemployment rate: 3.6%
- Labor force participation rate: 67%
- Median household income: $52,725
- Livability score: 79
- Typical home value: $245,835
- Typical rent: $836
- Unemployment rate: 3.0%
- Labor force participation rate: 74.0%
- Median household income: $59,912
- Livability score: 72
- Typical home value: $162,977
- Typical rent: $924
- Unemployment rate: 3.7%
- Labor force participation rate: 65.0%
- Median household income: $50,453
- Livability score: 74
- Typical home value: $161,633
- Typical rent: $849
- Unemployment rate: 4.1%
- Labor force participation rate: 66.0%
- Median household income: $51,485
- Livability score: 57
- Typical home value: $224,609
- Typical rent: $926
- Unemployment rate: 3.4%
- Labor force participation rate: 72.0%
- Median household income: $57,746
- Livability score: 81
Home prices in the top 100 metro areas
Each year, Kiplinger’s Personal Finance publishes its report of “Home Prices in the 100 Largest Metro Areas.”
Data includes the one-year change in home prices, change in home prices since the last real estate market peak in 2006, and how much housing prices have increased since the market hit bottom in early 2012.
The report also uses an affordability index to show the percentage of annual income needed to buy a median-priced home in each metro area. According to Kiplinger, the top 10 most affordable metro areas (listed alphabetically) in the U.S. are:
- Augusta, GA
- Birmingham, AL
- Cincinnati, OH
- Cleveland, OH
- Dayton, OH
- Indianapolis, IN
- Lansing-East Lansing, MI
- Little Rock, AR
- Philadelphia, PA
- Toledo, OH
Housing prices and COVID-19
At the beginning of the pandemic, Money published an article asking, “Where Home Prices Are Heading in the Age of Coronavirus.” Of course, that’s a question that was – and still is - on the mind of every real estate investor today.
It’s clear that the pandemic has hurt large sectors of the economy, and real estate markets across the country were no exception.
However, housing prices never plunged in response to COVID-19 the way the stock market did. In many markets, property prices have declined slightly or even increased.
Here’s a look at the top 10 states listed at the beginning of this article, comparing home values post-pandemic to current median listing price (as of November 2021, according to Zillow):
| State | February 2020 | November 2021 | Change |
| Mississippi | $130,000 | $151,190 | +16.3% |
| West Virginia | $108,000 | $122,342 | +13.3% |
| Arkansas | $133,000 | $161,570 | +21.5% |
| Oklahoma | $134,000 | $162,409 | +21.2% |
| Kentucky | $150,000 | $180,024 | +20.0% |
| Indiana | $160,000 | $200,056 | +25.0% |
| Alabama | $148,000 | $183,101 | +23.7% |
| Ohio | $154,000 | $192,352 | +24.9% |
| Iowa | $154,000 | $176,499 | +14.6% |
| Kansas | $157,000 | $190,409 | +21.3% |
