City Housing Markets Where a Dollar Goes Furthest

Housing

Published: May 24, 2024 11:50 am

During the pandemic, surging demand for housing — coupled with limited supply — sent home values soaring. Now, with mortgage rates at historic highs, millions of Americans are priced out of the market. According to the latest estimates from the National Association of Homebuilders, 103.5 million U.S. households cannot afford a median priced home. (Here is a look at the 50 U.S. cities with the cheapest rents.)

Between early 2020 and mid-2022, the list price of a typical American home rose by over 50%. As of April 2024, the latest month of available data from Realtor.com, the median list price in the U.S. was $429,950, only slightly below the all-time high of $449,000 reported in June 2022. While home values have fallen in the last two years, lower prices have been more than off-set by higher borrowing costs. The average interest rate on a 30-year fixed mortgage is now nearly 7%, up from less than 3% as recently as October 2021.

These market conditions have forced many prospective buyers to reevaluate what they can afford, and often, to settle for smaller homes. Still, housing prices are subject to a number of factors that can be isolated from broader market trends — and location is one of them. Even in the current seller’s market, there are parts of the country where even a modest budget can be enough for a reasonably sized, single-family home.

Using metro area-level data from Realtor.com, 24/7 Wall St. identified the U.S. housing markets where a dollar goes the furthest. Metro areas are ranked on the median list price per square foot in April 2024. Only places with at least 100 actively listed homes were considered. Cities with data outside of the typical margin of error were excluded from analysis. In the case of a tie, the city with the lower overall median list price ranks higher.

In each of the 37 cities on this list, the typical home is listed for less than $120 per square foot. For context, most homes nationwide are listed for at least $230 per square foot. Median home prices in these places range from $235,900 down to $111,450 — or 45% to 74% less than the national median.

These cities are disproportionately concentrated in the Midwest and the South. Meanwhile, no cities in the West rank on this list, and the only Northeastern cities are in New York and Pennsylvania. (Here is a look at how big a house $200,000 can buy in each state.)

Why It Matters

For Sale Real Estate Sign in Front of New House.

Source: Feverpitched / iStock via Getty Images

Widely seen as a cornerstone of the American dream, homeownership has also historically been a reliable means of building wealth. However, rising home values and borrowing costs have priced large segments of the population out of the market in recent years. The state of the housing market is not only impacting individuals and families, but also the broader economy. Residential investment accounts for as much as 5% of U.S. gross domestic product, and since mid-2020, the volume of new home sales in the U.S. has fallen by 33%.