Home prices are up sharply since before the COVID-19 pandemic. Realtor.com puts the current average price of a home on the market at $442,500. Tight inventory is the primary reason. One trigger of that is people do not want to sell homes on which they have a 3% mortgage when the interest rate on a 3-year fixed mortgage is almost 7% today.
A new study on home affordability shows the best place to buy a home based on that measure is Detroit. Badeloft USA did the study and used average home prices, monthly net salary, cost of living, and disposable income to determine “years to collect the house price.” Detroit’s number was 2.6. The authors of the study commented, “Markets with lower living costs give residents more room to save, while high-income areas see strong salaries balancing out steeper housing prices.”
Following Detroit were El Paso (5.3), Indianapolis (5.4), Oklahoma City (6.4), and Philadelphia (6.7).
Detroit may make the list because it is among America’s poorest cities. According to the Census Bureau, the city’s poverty rate is 31.2%. Median household income is $39,575, which is about half the nationwide figure. And the median value of occupied residences is $75,800, a modest fraction of the national figure.
One reason Detroit’s figures are so low is that its population in 1970 was 1,511,482, but in 2023 that number was 633,218.
Detroit’s home affordability is low for many of the wrong reasons.
If you’re tired of renting and want to finally buy a home, these may be your best options.
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