You Can Buy Most Homes in These 23 Cities for Under $125,000

Special Report

Published: February 7, 2024 1:28 pm

As of February of this year, the key 30-year fixed-rate mortgage averaged 6.63%, according to Freddie Mac, and although it dropped slightly from the 7.19% of last fall, these rates are still considerably higher than before the pandemic. The Federal Reserve began hiking rates early last year to reel back inflation from a 40-year-high, resulting in mortgage rates shooting up. These higher borrowing costs have pushed down home sales by 15.3% over the 12 months ending in August, according to the National Association of Realtors. (See which American city has run out of homes for sale.)

In many markets, many home prices remain inflated, despite the higher mortgage rates and declining sales home prices. According to real estate data provider ATTOM, the affordability of homes worsened in the third quarter, due to higher mortgage costs and higher-priced homes, compared to historical averages in 99% of U.S. counties, continuing a two-year pattern. This may not leave many options for homebuyers.

Where in America can someone with a modest income who can meet basic lending standards buy a low-cost home? According to data reviewed by 24/7 Wall St. from the U.S. Census Bureau’s 2022 American Community Survey, there are 19 cities where median home values are less than $125,000. These include certain cities in Ohio, Illinois, Michigan, and Pennsylvania — as 12 of the 19 cities where median home values are lower than $125,000 are located in these three states.

24/7 Wall St. ranked only census-designated places, cities, and towns with at least 50,000 residents that had relevant data. All data comes from the ACS except the percent of population change, which we calculated using ACS data. The median home value in the 19 cities on the list ranges from $123,400 in Harlingen, Texas, to just $48,700 in Flint, Michigan, where nearly 83% of homes are worth less than $100,000.

Ohio leads the states with six cities offering low-cost homes, including Cleveland and Akron. Median home values in the Ohio cities of Dayton and Canton are less than $98,000. To compare, the median home value nationwide was $320,900 in 2022, with just 12% of homes worth less than $100,000. (For double that, see how big a house $200K can get you in every state.)

Typically, when we see a rather affordable home, we wonder what the reason might be. After all, it may not be ordinary to find a beautiful home that checks all the boxes and is within our budget. Many of these cities do have reasons for homes with lower value. Most are in the Rust Belt or in coal-producing regions that have been adversely impacted by the era of deindustrialization, affecting job opportunities.

Seven of the 19 cities on the list have median household incomes below $40,000, and only two have median household incomes above $50,000. For reference, the median household income nationwide is $74,755. These conditions have helped push people out of these cities — 16 of the 19 cities on the list lost population in the past five years. Regardless, for professionals who can find decent local jobs or remote workers who do not need to rely on local employers, these cities offer the lowest home prices and a path to building at least some home equity.

Here are cities where most homes are priced under $125,000.