The U.S. housing market is currently experiencing a significant shortage of affordable homes, especially for middle-income buyers. A new analysis from the National Association of Realtors and Realtor.com revealed that the market is short more than 300,000 affordable homes for buyers in this income bracket.
Middle-income households, those earning up to $75,000, can afford to buy less than a quarter (23%) of listings in the current market, a stark contrast to five years ago when this income group could afford to buy half of all available homes. Following is a list of attractive, affordable cities for middle-class homebuyers.
1. Detroit, Michigan
Detroit tops this list of most affordable places to buy a home. Despite the median salary being among the lowest of the locales presented (at $36,000), median earners in Detroit will spend just about 6% of their monthly income on mortgage payments. Detroit has been on the upswing for the last few years with major companies like General Motors, Ally Financial, and Quicken Loans headquartered in the city, per Forbes.
2. Cleveland, Ohio
Cleveland, a city known for its rich history, culture, and economy, is one of the most affordable housing markets among major U.S. metros. The city’s location along the southern shore of Lake Erie makes it a great place to live for nature lovers, and its diverse population and resilient job market make it attractive to businesses and entrepreneurs, per Norada Real Estate Investments. According to the same source, “The Cleveland housing market is somewhat competitive, with homes receiving three offers on average and selling in around 27 days.”
The median sale price of a home in Cleveland was $120,000 last month, down 2.4% since last year, and the median sale price per square foot in Cleveland is $85. The overall cost of living in Cleveland is 7% lower than the national average.
3. Memphis, Tennessee
Memphis, a city renowned for its cultural richness and historical significance, stands out as a favorable market for potential homebuyers and real estate investors. The city, steeped in music and history, has a thriving real estate market characterized by affordability and diversity.
In July 2023, per Norada Real Estate Investments, Memphis saw a total of 1,260 units sold, marking a 3.72% decrease from July 2022. The median sales price was $239,950, showing a 2.1% increase compared to $235,000 in July 2022, indicating modest growth in property values. The average sales price stood at $295,842, reflecting a substantial 10% increase compared to July 2022, showcasing the range of price points in the market. Despite a slight fluctuation, Memphis remains an affordable — and fun — place to live.
4. Springfield, Illinois
Springfield, the capital city of Illinois, is highlighted as one of the most affordable cities for homebuyers, offering a favorable housing affordability scenario for potential buyers. The Springfield housing market is very competitive, with homes selling in around four days and many receiving multiple offers, some with waived contingencies. The median sale price of a home in Springfield was $156,000 last month, down 2.5% since last year, and the median sale price per square foot in Springfield is $96, up 2.7% since last year, according to Redfin data.
The city has a diverse range of homes available, with recent sales ranging from $113,000 to $265,000 per Redfin, showcasing the variety of affordable options available to prospective buyers. The city is served by several well-rated schools, including Sandburg Elementary School and Iles Elementary School, adding to its appeal for families.
5. Peoria, Illinois
Peoria is another Illinois city that stands out in terms of housing affordability, making it an attractive option for middle-class homebuyers. The median home sold price in Peoria was $126,278 in August 2023, up 1% from last year, and the median price per square foot was $80, according to RocketHomes.
The Peoria real estate market had 488 homes for sale in August 2023, a 3.9% decrease compared to July 2023. A total of 186 homes were sold or pending in Peoria in August 2023, up by 9.4% month-over-month. Of the 186 sold homes, 43% were sold under asking price, 24% were sold at asking price, and 33% were sold over asking price.
6. Montgomery, Alabama
Montgomery, the capital city of Alabama, is recognized for its historical significance and diverse cultural heritage, and it stands out as one of the most affordable cities for homebuyers in 2023. The city offers a range of affordable housing options, with the median price for homes in Montgomery being about $190,000, per RocketHomes. Bo Evans, a past president and member of the Montgomery Area Association of Realtors, mentioned that Montgomery is such an affordable place for homebuyers because of the slow and steady growth the market experiences, per the Montgomery Advertiser. Home values rarely swing too heavily.
Whether you are looking for a cozy one-bedroom or a spacious five-bedroom home, Montgomery offers a variety of choices to suit different preferences and needs.
7. Columbus, Georgia
Columbus, a city known for its vibrant history and diverse cultural scene, emerges as a favorable market for potential homebuyers. The median sold price in Columbus was $195,000 in August 2023, down 16.5% from last month, and the median price per square foot was $122, per RocketHomes data.
The housing market in Columbus experienced varied trends in August 2023. The price of two-bedroom homes decreased by 68.6% and three-bedroom homes decreased by 22.8%. Four-bedroom home prices rose by 2.4%, and homes with five or more bedrooms decreased by 9.3%.
The real estate market had 146 homes for sale in August 2023, a 9.8% increase compared to July 2023, and a total of 41 homes were sold or pending in Columbus in August 2023 — up by 13.9% month-over-month. The average sale time for homes in Columbus was 43 days in August 2023, down by 20.4% compared to last month. The city’s diverse range of available properties and cultural richness make it an attractive option for those looking to invest in real estate or find an affordable home.
Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.
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