Affordable housing options for local buyers seem scarce in most American cities, as indicated by a recent study, which revealed that only two cities fit the bill.
In a concerning trend, a median income can't purchase the median-priced home in 48 of the 50 largest metropolitan areas, highlighting the challenges faced by potential homeowners across the country. However, two U.S. cities, Detroit and Pittsburgh, stand out as exceptions, offering a glimmer of hope for affordable housing.
As of mid-June, the national median sales price of houses sold in the U.S. is $416,900. In contrast, Detroit's median home sales price is $195,000, and Pittsburgh's is $250,000, making them the most affordable among high-population areas. Experts suggest that the salaries in Detroit and Pittsburgh are not super high, but the cost of entry into the market is low enough that people with average incomes can still buy, which is rare.
Iowa, with below-average construction costs of $100-$160 per square foot and more available land compared to many other states, is noted as the only state that is currently affordable for residents to buy homes considering local incomes and prices across the board. Other affordable metros with reasonable median home prices and wages include St. Louis, Missouri-Illinois, Buffalo-Cheektowaga, New York, and Louisville/Jefferson County, Kentucky-Indiana, known for affordability for households making under $100,000 annually.
Oklahoma City, Oklahoma, boasts a low median home value of $240,048, ranking it as one of the most affordable for first-time homebuyers. In Arkansas, cities like Fort Smith (median home value ~$180,352) and Conway (median home value ~$240,516) offer cheaper living costs, thriving job markets, and lower housing costs relative to incomes. Springfield, Missouri, also provides affordable housing (~$229,703 median home value) and a strong local job market.
Many affordable cities are in the Midwest and South, where the cost of living is 15-25% lower than the national average. Housing cost recommendations suggest spending no more than 30% of income on housing; places like Detroit and Pittsburgh meet this affordability benchmark based on local income and home prices. Cities in the Rust Belt continue to offer some of the best affordability due to legacy economic structures maintaining lower home prices despite developing job markets.
In conclusion, the U.S. housing market affordability at present favors cities in the Midwest and South, especially those like Detroit, Pittsburgh, Oklahoma City, and cities in Iowa and Arkansas, where median incomes align well with lower median home prices. These areas provide good opportunities for homebuyers seeking the best value for their income. Iowa, in particular, is the most affordable state for home purchases. Detroit and Pittsburgh are referred to as "accidents of history" due to their affordable housing markets. The inability to afford a home deepens the country's wealth gap as homeowners have a median net worth of $400,000 compared to just $10,400 for renters.
- In comparison to the national median sales price of houses, Detroit and Pittsburgh, with prices at $195,000 and $250,000 respectively, offer affordable real estate options for potential homeowners.
- Iowa, with construction costs of $100-$160 per square foot and reasonable living costs, is the most affordable state for home purchases, making it a suitable option for homebuyers seeking the best value for their income.
- Cities like Detroit and Pittsburgh, known as "accidents of history," are renowned for their affordability in housing costs, presenting opportunities for investors to capitalize on low-priced properties and potentially substantial returns on their investments.
