7 Expert Lists Showcasing The Cheapest Housing Markets of 2021

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 falling to historic lows.

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 Apartment Therapy and WalletHub, the 10 cheapest states to buy a home in are:

1. South Dakota 
  • Average price: $198,000
  • Average price per square foot: $124
  • Effective property tax rate: 1.32%
2. Arkansas
  • Average price: $200,000
  • Average price per square foot: $103
  • Effective property tax rate: 0.63%
3. Ohio
  • Average price: $200,000
  • Average price per square foot: $118
  • Effective property tax rate: 1.58%
4. Missouri
  • Average price: $229,000
  • Average price per square foot: $130
  • Effective property tax rate: 0.97%
5. Wisconsin
  • Average price: $233,000
  • Average price per square foot: $130
  • Effective property tax rate: 1.91%
6. North Dakota
  • Average list price: $238,000
  • Average price per square foot: $151
  • Effective property tax rate: 0.99%
7. West Virginia
  • Average price: $240,000
  • Average price per square foot: $119
  • Effective property tax rate: 0.59%
8. Alabama
  • Average price: $243,000
  • Average price per square foot: $115
  • Effective property tax rate: 0.42%
9. Michigan
  • Average price: $247,000
  • Average price per square foot: $134
  • Effective property tax rate: 1.58%
10. Kentucky
  • Average price: $250,000
  • Average price per square foot: $122
  • Effective property tax rate: 8.86%

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Cheapest Housing Markets 2020

In their article “8 Cheapest States to Buy a House for Investment in 2021”, Mashvisor identified these states as the best for rental property investors. The report analyzes key investment criteria such as price to rent ratio, monthly rental income, and cash on cash return to arrive at these top 8 markets:

1. Iowa
  • Median property price: $230,620
  • Price per square foot: $157
  • Price to rent ratio: 18
  • Monthly rental income: $1,082
2. North Dakota
  • Median property price: $242,621
  • Price per square foot: $116
  • Price to rent ratio: 16
  • Monthly rental income: $1,271
3. Ohio
  • Median property price: $249,141
  • Price per square foot: $128
  • Price to rent ratio: 18
  • Monthly rental income: $1,169
4. West Virginia
  • Median property price: $254,747
  • Price per square foot: $122
  • Price to rent ratio: 19
  • Monthly rental income: $1,094
5. Indiana
  • Median property price: $255,237
  • Price per square foot: $124
  • Price to rent ratio: 19
  • Monthly rental income: $1,115
6. Kentucky
  • Median property price: $272,533
  • Price per square foot: $189
  • Price to rent ratio: 20
  • Monthly rental income: $1,115
7. Mississippi
  • Median property price: $285,687
  • Price per square foot: $130
  • Price to rent ratio: 20
  • Monthly rental income: $1,200
8. Arkansas
  • Median property price: $288,898
  • Price per square foot: $129
  • Price to rent ratio: 22
  • Monthly rental income: $1,095

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

CNBC created a list of the top 10 cities in the U.S. where it’s easiest and most affordable to buy a home, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI).

1. Scranton - Wilkes-Barre - Hazleton, PA
  • Share of homes affordable for median income: 89%
  • Median family income: $66,600
  • Median home sale price: $120,000
2. Harrisburg-Carlisle, PA
  • Share of homes affordable for median income: 88%
  • Median family income: $79,000
  • Median home sale price: $170,000
3. Pittsburgh, PA
  • Share of homes affordable for median income: 87%
  • Median family income: $77,100
  • Median home sale price: $155,000
4. St. Louis, MO-IL
  • Share of homes affordable for median income: 87%
  • Median family income: $77,000
  • Median home sale price: $165,000
5. Wilmington, DE-MD-NJ
  • Share of homes affordable for median income: 87%
  • Median family income: $84,200
  • Median home sale price: $228,000
6. Indianapolis-Carmel-Anderson, IN
  • Share of homes affordable for median income: 86%
  • Median family income: $76,200
  • Median home sale price: $195,000
7. Toledo, OH
  • Share of homes affordable for median income: 86%
  • Median family income: $66,800
  • Median home sale price: $141,000
8. Albany-Schenectady-Troy, NY
  • Share of homes affordable for median income: 85%
  • Median family income: $92,200
  • Median home sale price: $220,000
9. Syracuse, NY
  • Share of homes affordable for median income: 84%
  • Median family income: $70,400
  • Median home sale price: $145,000
Cincinnati, OH-KY-IN
  • Share of homes affordable for median income: 84%
  • Median family income: $80,200
  • Median home sale price: $185,000

 

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Most Affordable for First-Time Buyers

National Mortgage News has ranked the top 12 most affordable housing markets for first-time homebuyers. The report compares the median income of consumers between 25 and 44 years old with the median home list prices. The lower the affordability ratio, the less of a financial burden for the buyer to purchase a home:

1. Pittsburgh, PA
  • Affordability ratio: 2.704
  • Median list price: $201,557
  • Median first-time homebuyer income: $74,549
2. St. Louis, MO
  • Affordability ratio: 3.076
  • Median list price: $221,364
  • Median first-time homebuyer income: $71,956
3. Cleveland, OH
  • Affordability ratio: 3.085
  • Median list price: $191,396
  • Median first-time homebuyer income: $62,042
4. Buffalo, NY
  • Affordability ratio: 3.105
  • Median list price: $200,042
  • Median first-time homebuyer income: $64,042
5. Hartford, CT
  • Affordability ratio: 3.38
  • Median list price: $278,002
  • Median first-time homebuyer income: $82,261
6. Detroit, MI
  • Affordability ratio: 3.461
  • Median list price: $232,376
  • Median first-time homebuyer income: $67,134
7. Baltimore, MD
  • Affordability ratio: 3.683
  • Median list price: $321,025
  • Median first-time homebuyer income: $87,154
8. Philadelphia, PA
  • Affordability ratio: 3.775
  • Median list price: $294,837
  • Median first-time homebuyer income: $78,112
9. Chicago, IL
  • Affordability ratio: 4.026
  • Median list price: $316,791
  • Median first-time homebuyer income: $78,689
10. Birmingham, AL
  • Affordability ratio: 4.043
  • Median list price: $256,148
  • Median first-time homebuyer income: $63,362
11. Minneapolis, MN
  • Affordability ratio: 4.085
  • Median list price: $373,137
  • Median first-time homebuyer income: $91,337
12. Indianapolis, IN
  • Affordability ratio: 4.124
  • Median list price: $275,182
  • Median first-time homebuyer income: $66,726

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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. Cedar Rapids, IA
  • Median list price: $162,500
  • Monthly market rent: $910
  • Unemployment rate: 2.7%
  • Labor force participation rate: 69.4%
  • Median household income: $59,603
  • Livability score: 76
2. Fort Smith, AR
  • Median list price: $159,200
  • Monthly market rent: $750
  • Unemployment rate: 3.4%
  • Labor force participation rate: 61.1%
  • Median household income: $45,496
  • Livability score: 62
3. Sterling Heights, MI
  • Median list price: $209,000
  • Monthly market rent: $1,330
  • Unemployment rate: 2.0%
  • Labor force participation rate: 64.3%
  • Median household income: $60,631
  • Livability score: 80
4. Lubbock, TX
  • Median list price: $195,000
  • Monthly market rent: $980
  • Unemployment rate: 2.8%
  • Labor force participation rate: 64.5%
  • Median household income: $48,042
  • Livability score: 78
5. Appleton, WI
  • Median list price: $175,000
  • Monthly market rent: $1,050
  • Unemployment rate: 2.9%
  • Labor force participation rate: 66.9%
  • Median household income: $60,021
  • Livability score: 77

 

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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. Dayton, OH
  6. Indianapolis, IN
  7. Lansing-East Lansing, MI
  8. Little Rock, AR
  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 home values post-pandemic to current median listing price (as of December 2020, according to Zillow):

State February 2020 December 2020 Change
South Dakota $214,000 $224,000 +4.7%
Arkansas $133,900 $141,000 +6.0%
Ohio $153,000 $166,400 +8.8%
Missouri $165,000 $178,700 +8.3%
Wisconsin $196,000 $211,600 +8.0%
North Dakota $233,000 $238,100 +2.2%
West Virginia $108,000 $113,100 +4.7%
Alabama $146,000 $157,400 +7.8%
Michigan $175,000 $190,000 +8.6%
Kentucky $149,000 $158,700 +6.5%

 

 

 

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Jeff Rohde

Author

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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