America’s 25 Most Affordable Housing Markets
In May 2023 the median home listing price reached $441,000, up from $430,000 in April. Despite the increase, the price is down from a record high of $449,000 in June 2022. The yearly growth rate in median list price of 0.9% is down from 2.5% in April and is the lowest price growth seen since 2016. These cooling trends are hopeful for those looking to buy, especially after the surge in home prices in 2021. (These are the states where home values increased the most during COVID.)
Another sign of improvement for home buyers is that the percentage of average wages needed to cover homeownership expenses has fallen slightly to 29.9% in the first quarter, according to property data provider ATTOM. However, this is still higher than the common lending standard, which allows for a debt-to-income ratio of 28%, that is, home-related expenses should not exceed 28% of wages.
While nationwide the ratio is higher than the industry standard, meaning homes are unaffordable, in a number of places the ratio is far lower and homes are considerably more affordable.
To find the 25 counties where homes are most affordable, 24/7 Wall St. reviewed U.S. Home Affordability Report for the first quarter of 2023 ATTOM, a property data provider. The report determined affordability for average wage earners in 572 counties by calculating the amount of income needed for major home ownership expenses on a median-priced home, assuming a loan of 80% of the purchase price and a 28% maximum “front-end” debt-to-income ratio. Counties are ranked by the percent of annual wages needed to afford median monthly housing costs.
In all of the counties with the most affordable homes, the percentage of average local wages needed to cover homeownership costs is below 17%, considerably below the 29.9% nationwide standard.
Most of the counties on this list are in the Midwest, the South, and the mid-Atlantic, with five each in Illinois and Pennsylvania. Many of the counties are smaller, with populations under 200,000. However, a few larger outliers are Philadelphia County, Pennsylvania, with a population of 1.6 million, and Wayne County, Michigan, with a population nearing 1.8 million. (These are the cities where people need the smallest downpayments to buy their home)
The report also calculated the wage required to afford a median-priced home. The median home price of $320,000 in the first quarter of 2023 requires an annual wage of $78,416, based on the same assumptions, higher than the average annual wage nationwide of $70,460. In all the counties on this list, the required annual wage is lower than the local average wage and is below $35,200.
Click here to see the counties with the most affordable homes in America.
Click here to read our detailed methodology.
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