10 US cities where homebuyers can find a good deal right now
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- Inflation and interest rate hikes have pushed US housing affordability to a three-decade low.
- This has led to a slowdown in home purchases across the country.
- It's an interesting moment in which several cities are boasting housing deals not seen in years.
So you're ready to buy a new home?
For many Americans, purchasing a home right now may feel like a pipe dream. However, for those who can still afford a home purchase, there is some good news — the real estate market is becoming less competitive.
It all comes down to the Federal Reserve's attempts to bring the economy into equilibrium. As the Fed combats soaring inflation by raising interest rates, it has led to a runup in mortgage rates. That, combined with the pandemic boom in prices, has driven would-be buyers out of the market. As a result, prices in some markets are cooling.
"As affordability wanes, would-be buyers are pulling back from the market, prompting annual house price appreciation to moderate," Mark Fleming, the chief economist at financial corporation First American, told Insider.
With less Americans purchasing homes, prospective buyers are finally beginning to see home price declines in cities across the country — some more than others. Though data from mortgage finance giant Freddie Mac shows the average rate on a 30-year fixed-rate mortgage climbed to 6.29% last week, experts expect that to decline again by next spring as fears of a recession become more real.
"It turns out shoppers in certain parts of the country don't need to wait for the national market to sort itself out — new opportunities to buy the right home are opening up fast," Evan Wyloge, a research analyst at Realtor.com, wrote in a housing report published in September.
To determine what markets present a good deal for homebuyers, Realtor.com analyzed housing data from the nation's 250 largest cities. The company calculated the price a buyer would have to pay per square foot compared with the city's local median income.
Realtor.com also looked at data on how many days a home typically spends on the market in each city, the percentage of sellers slashing their prices, and the amount of homes for sale compared to the total number of homes. Notably, the company limited its list to just one city per state to "ensure geographic diversity."
Its researchers were able to identify that several cities across the country are softening for homebuyers. In Southern or Midwestern cities like Midland, Texas and Cedar Rapids, Iowa — which rank as Realtor.com's top two markets for prospective buyers — Americans are lucking out on their home purchases. Maybe that means you can too.
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Median listing price: $934,500
Scottsdale, Arizona, is a well-to-do suburb of the Phoenix metropolitan area. The hub has a surplus of restaurants, numerous outdoor activities and has recently been recognized as a top destination for bachelorette parties. This has led to an uptick in tourism and homebuyer migration. Data from real estate brokerage Redfin shows that out of all US cities, Phoenix was the most popular migration destination in 2021, followed by the cities of Dallas and Orlando. The increased traffic has helped to push its median home price to one of the highest in the nation. However, prospective buyers are starting to see more discounts as the market normalizes.
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Median listing price: $339,950
Myrtle Beach, South Carolina, is a beach goer's wildest dreams. Nicknamed "the heart of the Grand Strand coastline" the city is home to three of South Carolina's most beautiful beaches and boasts several resorts and beach clubs. The vacation community is home to just under 35,000 residents and its housing market is relatively non-competitive. According to data from real estate brokerage Redfin, the city earns a ranking of 18 out of 100 on its competitive score.
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Median listing price: $335,000
Each year, millions of Americans come to Baton Rouge, Louisiana, to enjoy the city's rich cultural heritage. Renowned for its music and art, the city often makes a permanent impression on its visitors. For those who decide to stay, Baton Rouge's real estate market offers them great affordability. As one of the least expensive housing ecosystems in the country, homebuyers won't have to dig too deep to afford the city's median priced home.
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Median listing price: $621,995
Known as the "Biggest Little City in the World '' Reno is like a more affordable Las Vegas. Perhaps that's why the city saw a notable uptick in home purchases during the Covid-19 pandemic. However, as the US real estate market slows down, housing activity in Reno is cooling down fast. According to realtor.com, among the nation's 200 largest metropolitan areas, the city has the highest share of home sellers who are cutting prices on their listings. The company's data shows that in July, 32.6% of its listings saw price reductions.
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Median listing price: $564,945
Boise has been a popular home buying destination during the Covid-19 pandemic. As a result its home prices have soared as Americans migrate. However, as the real estate market begins to cool, the city is losing some steam. According to real estate brokerage Redfin, nearly 70% of home sellers slashed asking prices on their homes in July — a pivot for a market that was ripe with bidding wars and buyer competition.
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Median listing price: $341,000
Jacksonville's housing market is coming back to earth as the rest of the US real estate market cools down. First Coast News reported that the city is beginning to see a surplus of housing inventory as homes stay on the market longer. It's resulted in price declines in the city, which has helped homebuyers gain more leverage in their purchasing decisions. Those moving into the city will enjoy its national parks, museums and river walks.
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Median listing price: $402,000
Lawrenceville, Georgia, is the second oldest hub of Metro Atlanta. The suburb was voted one of the top 30 places in the country to have a wedding. Home to under 35,000 residents, Lawrenceville's housing market is surprisingly competitive. According to data from Redfin, the suburb receives a 75 out of 100 on its competitive ranking score.
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Median listing price: $79,700
Detroit is known for a lot of things, including being the birthplace of the US automobile industry. As its real estate market heats up, it's now known for something else — its competitive housing market. In August, Detroit News reported that the city's median home price hit $100,000 for the first time in history. The increase has been driven by the redevelopment of its downtown district, which has greatly improved its housing stock. This has led to an uptick in bidding wars and ultimately investment in the city.
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Median listing price: $232,450
Voted one of America's best cities on the rise, Cedar Rapids is going through a cultural shift. The city has spent billions of dollars renovating its arts centers, offering its citizens and visitors numerous attractions such as its acclaimed Paramount Theater. Transplants moving to the city will be delighted to hear that the median home price is under $300, ooo. However, competition is stiff as the city suffers from a fundamental lack of new home construction.
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Median listing price: $343,730
Midland, Texas, is a small town located in West Texas. Hours away from the busy suburbs of Dallas and Fort Worth, the city is home to a little more than 150,000 residents. In recent years, Midland has budded with popularity as migrating homebuyers take advantage of the city's relatively affordable homes. As a result, home prices have spiked as its housing market becomes more saturated. However, compared to other popular housing markets in Texas, prospective buyers are getting a lot bang for their buck.
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