5. Memphis, Tenn.
> Home price as pct. of family income: 139%
> Median home price: $79,000 (3rd lowest)
> Median family income: $56,900 (52nd lowest)
> Unemployment: 8.8% (58th highest)
Memphis is the only metropolitan area on this list not located in the Midwest. While home prices of $79,000 are the third lowest of all metropolitan areas measured, home prices are expected to rise at an annual rate of 6% between 2012 and 2017, more than two percentage points more than the national median. Home prices are expected to rise 8.6% next year alone, one of the biggest growth rates in the country. According to Stiff, Tennessee’s expected home price is probably due to demographics — population growth will likely be higher in states such as Tennessee compared to industrial Midwest states such as Michigan and Ohio.
4. Warren-Troy-Farmington Hills, Mich.
> Home price as pct. of family income: 133%
> Median home price: $95,000 (12th lowest)
> Median family income: $71,600(48th highest)
> Unemployment: 8.7% (65th highest)
In the Warren-Troy-Farmington Hills metro area, the combined factors of high income and low home prices make paying for a house easy. The median family income of $71,600 is the highest on this list and nearly $20,000 higher than the nearby Detroit metro. Furthermore, the median home price of $95,000, which has fallen 40.9% since it reached its peak in the second quarter of 2005, means that homes have become a bargain for those who can afford to buy one in this shaky economy.
3. Rockford, Ill.
> Home price as pct. of family income: 132%
> Median home price: $80,000 (5th lowest)
> Median family income: $60,000 (76th lowest)
> Unemployment: 11.6% (17th highest)
For decades, Rockford’s economy has relied primarily on a strong manufacturing base, but in recent years it has struggled with high unemployment due to the manufacturing industry’s decline. Rockford’s unemployment rate of 11.6% is the highest of all metro areas on this list and the 17th highest of all metro areas surveyed. This, along with a median family income below the U.S. median income, has led to cheaper home prices. The high unemployment rate could depress the housing market for some time. Median home prices are only expected to rise by 2.4% in 2013, less than the 5.0% price increase expected nationally. However, between 2012 and 2017, home prices are expected to grow at an annualized rate of 4.2%, besting the U.S. rate of 3.9%.
2. South Bend, Ind.-Mich.
> Home price as pct. of family income: 121%
> Median home price: $69,000 (2nd lowest)
> Median family income: $57,300 (55th lowest)
> Unemployment: 8.6% (66th highest)
South Bend has been more fortunate than other metropolitan areas in terms of avoiding housing market damage. Furthermore, home prices only dropped by 8.2% from their peak, or less than a quarter of the drop in prices nationwide. Still, the area suffers from above average unemployment rate at 8.6%. The median monthly mortgage payment for a house in South Bend is only 5.52% of the median monthly income. This is the only metro area in the United States, besides Detroit, where mortgage payments are less than 6% of median income.
1. Detroit-Livonia-Dearborn, Mich.
> Home price as pct. of family income: 79%
> Median home price: $41,000 (the lowest)
> Median family income: $51,900 (19th lowest)
> Unemployment: 10.6% (23rd highest)
While home prices were already cheap in Detroit before the housing downturn, they became even cheaper after. Home prices between the first quarter of 2007 and the first quarter of 2012 fell a whopping 53.7%, or 14.3% annually — the 10th-largest drop of all metro areas surveyed. With a median home price that is $28,000 lower than any other metro area reviewed, a median mortgage payment is only 3.6% of monthly income. Home prices are expected to stay cheap for a while, rising only 3.8% on an annual basis from 2012 to 2017, below the 3.9% annual growth in home prices across the United States. While home prices rose faster in Detroit than in any other metro area in 2011 at 8.6%, prices are expected to fall an additional 10.7% this year, more than any of the other 198 metropolitan areas surveyed.