7 Expert Lists Showcasing The Cheapest Housing Markets of 2020

Many people are surprised to see that housing prices in many markets haven’t changed all that much this year, even with everything going on in the world we live in. 

There are several reasons why prices for houses are staying steady, including the multiple revenue streams of income rental property generates, unique tax benefits, and interest rates falling to historic lows.

However, just because prices are high in some 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 Business Insider, the 10 cheapest states to buy a home in are:

  1. West Virginia 
  • Median list price: $169,000 / $165,000
  • Median list price per square foot: $98 / $97
  • Average effective property tax rate: 0.57%
  1. Arkansas
  • Median list price: $179,900 / $176,000
  • Median list price per square foot: $101 / $101.00
  • Average effective property tax rate: 0.61%
  1. Alabama
  • Median list price: $219,900 / $220,000
  • Median list price per square foot: $103 / $105
  • Average effective property tax rate: 0.40%
  1. Mississippi
  • Median list price: $189,000 / $189,000
  • Median list price per square foot: $95 / $96
  • Average effective property tax rate: 0.78%
  1. Oklahoma
  • Median list price: $193,000 / $195,000
  • Median list price per square foot: $106 / $108
  • Average effective property tax rate: 0.89%
  1. Indiana
  • Median list price: $195,000 / $186,000
  • Median list price per square foot: $109 / $108
  • Average effective property tax rate: 0.84%
  1. Kentucky
  • Median list price: $199,000 / $193,500
  • Median list price per square foot: $119 / $118
  • Average effective property tax rate: 0.85%
  1. South Carolina (tied with Missouri)
  • Median list price: $250,000 / $247,000
  • Median list price per square foot: $131 / $128
  • Average effective property tax rate: 0.55%
  1. Missouri (tied with South Carolina)
  • Median list price: $193,000 / $186,000
  • Median list price per square foot: $122 / $120
  • Average effective property tax rate: 0.95%
  1. Ohio
  • Median list price: $180,000 / $170,000
  • Median list price per square foot: $111 / $108
  • Average effective property tax rate: 1.54%

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Cheapest Housing Markets 2020

In their article “Invest in the 5 Cheapest Housing Markets in 2020”, Mashvisor identified these cities as the cheapest this year. The report analyzes factors such as house price trends, cost of living, and demand from Millennials to arrive at these top 5 markets:

  1. Pittsburgh, PA
  • Median property price: $230,803
  • Price per square foot: $85
  1. Detroit, MI
  • Median property price: $168,689
  • Price per square foot: $108
  1. Fort Wayne, IN
  • Median property price: $214,240
  • Price per square foot: $107
  1. Fayetteville, NC
  • Median property price: $182,071
  • Price per square foot: $85
  1. Cleveland, OH
  • Median property price: $163,552
  • Price per square foot: $102

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 Markets by Income

National Mortgage News created a list of the 12 most affordable housing markets based on the share of income needed to buy a house. 

The report uses data from Redfin to analyze median home prices, local incomes, and the median monthly mortgage payment amount (including taxes) in the 88 most populous metro areas in the U.S.

  1. Detroit, MI
  • Share of income needed to buy a house: 47.4%
  • Median household income: $56,339
  • Median home sale price: $142,750
  • Minimum suggested income to afford a median house: $26,690
  • Median monthly mortgage payment: $667
  1. Rochester, NY
  • Share of income needed to buy a house: 54.8%
  • Median household income: $55,256
  • Median home sale price: $162,000
  • Minimum suggested income to afford a median house: $30,289
  • Median monthly mortgage payment: $757
  1. Dayton, OH
  • Share of income needed to buy a house: 56.6%
  • Median household income: $51,204
  • Median home sale price: $155,000
  • Minimum suggested income to afford a median house: $28,980
  • Median monthly mortgage payment: $725
  1. Buffalo, NY
  • Share of income needed to buy a house: 59.4%
  • Median household income: $53,534
  • Median home sale price: $169,999
  • Minimum suggested income to afford a median house: $31,785
  • Median monthly mortgage payment: $795
  1. Pittsburgh, PA
  • Share of income needed to buy a house: 60%
  • Median household income: $56,073
  • Median home sale price: $180,000
  • Minimum suggested income to afford a median house: $33,655
  • Median monthly mortgage payment: $841
  1. St. Louis, MO
  • Share of income needed to buy a house: 60.2%
  • Median household income: $59,046
  • Median home sale price: $190,150
  • Minimum suggested income to afford a median house: $35,553
  • Median monthly mortgage payment: $889
  1. Camden, NJ
  • Share of income needed to buy a house: 60.6%
  • Median household income: $66,285
  • Median home sale price: $215,000
  • Minimum suggested income to afford a median house: $40,199
  • Median monthly mortgage payment: $1,005
  1. Hartford, CT
  • Share of income needed to buy a house: 61.3%
  • Median household income: $73,209
  • Median home sale price: $239,950
  • Minimum suggested income to afford a median house: $44,864
  • Median monthly mortgage payment: $1,122
  1. Cleveland, OH
  • Share of income needed to buy a house: 61.9%
  • Median household income: $52,446
  • Median home sale price: $173,500
  • Minimum suggested income to afford a median house: $32,439
  • Median monthly mortgage payment: $811
  1. Oklahoma City, OK
  • Share of income needed to buy a house: 62.8%
  • Median household income: $54,946
  • Median home sale price: $184,500
  • Minimum suggested income to afford a median house: $34,496
  • Median monthly mortgage payment: $862
  1. New Haven, CT
  • Share of income needed to buy a house: 63.7%
  • Median household income: $64,872
  • Median home sale price: $221,000
  • Minimum suggested income to afford a median house: $41,321
  • Median monthly mortgage payment: $1,033
  1. Cincinnati, OH
  • Share of income needed to buy a house: 63.9%
  • Median household income: $59,478
  • Median home sale price: $203,275
  • Minimum suggested income to afford a median house: $38,007
  • Median monthly mortgage payment: $950
  •  

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Most Affordable for First-Time Buyers

National Mortgage News also ranked the top 12 most affordable housing markets for first-time homebuyers. The report compares median renter income to the income needed to purchase a median-priced home using a 30-year fixed mortgage and only a 5% down payment:

  1. Oklahoma City, OK
  • Share of affordable homes: 74%
  • Median sales price: $160,000
  • Median household income: $37,074
  1. Louisville, KY
  • Share of affordable homes: 73%
  • Median sales price: $182,050
  • Median household income: $42,840
  1. Memphis, TN
  • Share of affordable homes: 72%
  • Median sales price: $158,537
  • Median household income: $37,873
  1. Birmingham, AL
  • Share of affordable homes: 71%
  • Median sales price: $161,816
  • Median household income: $38,760
  1. Kansas City, MO
  • Share of affordable homes: 71%
  • Median sales price: $220,172
  • Median household income: $47,153
  1. Pittsburgh, PA
  • Share of affordable homes: 70%
  • Median sales price: $157,750
  • Median household income: $37,126
  1. Tampa, FL
  • Share of affordable homes: 69%
  • Median sales price: $207,333
  • Median household income: $43,679
  1. Atlanta, GA
  • Share of affordable homes: 68%
  • Median sales price: $221,816
  • Median household income: $46,920
  1. Indianapolis, IN
  • Share of affordable homes: 68%
  • Median sales price: $195,111
  • Median household income: $40,025
  1. St. Louis, MO
  • Share of affordable homes: 66%
  • Median sales price: $175,000
  • Median household income: $36,721
  1. Chicago, IL
  • Share of affordable homes: 65%
  • Median sales price: $230,666
  • Median household income: $45,903
  1. Cincinnati, OH
  • Share of affordable homes: 65%
  • Median sales price: $171,916
  • Median household income: $35,700
  •  

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Best Cities for Cheap Housing and Good Jobs

Cheap housing and good jobs. What more could a real estate investor ask for? 

Investopedia recently data from a variety of source including U.S. News & World Report, the U.S. Census Bureau, FBI, U.S. Department of Labor, Glassdoor, and Manpower Group to compile this list of the top 5 cities with a strong job market and affordable housing:

  1. Des Moines, IA
  • Population: 600,000
  • Median annual salary: $49,420
  • Median home price: $181,217
  • Share of income spent on housing: 24%
  • Unemployment rate: 2.9%
  1. Minneapolis-St. Paul, MN
  • Population: 3.5 million
  • Median annual salary: $55,010
  • Median home price: $237,367
  • Share of income spent on housing: 25%
  • Unemployment rate: 3.3%
  1. Salt Lake City, UT
  • Population: 2.4 million
  • Median annual salary: $46,221
  • Median home price: $280,894
  • Share of income spent on housing: 25%
  • Unemployment rate: 3.1%
  1. Boise, ID
  • Population: 664,000
  • Median annual salary: $43,040
  • Median home price: $221,475
  • Share of income spent on housing: 26%
  • Unemployment rate: 3%
  1. Omaha, NB
  • Population: 904,000
  • Median annual salary: $46,490
  • Median home price: $165,667
  • Share of income spent on housing: 25%
  • Unemployment rate: 3%

 

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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:

  1. Augusta, GA
  2. Birmingham, AL
  3. Cincinnati, OH
  4. Cleveland, OH
  5. Detroit, MI
  6. Little Rock, AK
  7. Memphis, TN
  8. Oklahoma City, OK
  9. Philadelphia, PA
  10. Toledo, OH

 

Housing Prices and COVID-19

A few months ago, Money published an article asking “Where Home Prices Are Heading in the Age of Coronavirus.” Of course, that’s a question that 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 housing prices post-pandemic to current median listing price (as of March 2020, according to Zillow):

State November 2019 March 2020 Change
West Virginia $169,000 $165,000 -2.4%
Arkansas $179,900 $176,000 -1.7%
Alabama $219,900 $220,000 0.0%
Mississippi $189,000 $189,000 0.0%
Oklahoma $193,000 $195,000 +1.0%
Indiana $195,000 $186,000 -4.6%
Kentucky $199,000 $193,500 -2.8%
South Carolina $250,000 $247,000 -1.2%
Missouri $193,000 $186,000 -3.6%
Ohio $180,000 $170,000 -5.6%

 

 

 

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Jeff Rohde

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Jeff Rohde

Jeff has over 25 years of experience in all segments of the real estate industry including investing, brokerage, residential, commercial, and property management. While his real estate business runs on autopilot, he writes articles to help other investors grow and manage their real estate portfolios.

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