The Most (and Least) Affordable Cities In The U.S.

tim-kruliaby Tim Krulia – Private Money Blueprint CFO

As part of our quest here at PMBP to give you the single best resource on the financial aspects of growing your real estate investing business (aka, we help people find private money quickly, easily, and abundantly)… here’s an article I found that will help you target some great cities to look at investing in right now.

But, I’ll summarize it here for ya to save you some time πŸ™‚

The Most Affordable Real Estate Markets To Buy a House

According to CNN Money… they did a vast survey and came up w/ the most affordable (defined by the median income versus the media house purchase price) in America… enjoy πŸ™‚

Most Affordable

  1. Indianapolis –
    Median home price: $105,000
    Median income: $68,100
    Affordability score: 94.5%
  2. Youngstown, OH
    Median home price: $72,000
    Median income: $54,300
    Affordability score: 93.9%
  3. Detroit, MI
    Median home price: $84,000
    Median income: $57,100
    Affordability score: 92.2%
  4. Warren, MI
    Median home price: $140,000
    Median income: $79,000
    Affordability score: 91.8%
  5. Grand Rapids, MI
    Median home price: $103,000
    Median income: $63,100
    Affordability score: 91.4% — 5th best

That does it for the top 5 MOST affordable places to buy a home. What this shows you is where the home prices are depressed… a lot of these markets are being hurt big time by foreclosures… which is a good thing right now (for buyers).

Notice 3 of the top 5 are in Michigan…

Now, for the LEAST affordable.

The Least Affordable Real Estate Markets To Buy a House

  1. New York City, NY
    Median home price: $425,000
    Median income: $64,800
    Affordability score: 19.2%
  2. San Francisco, CA
    Median home price: $598,000
    Median income: $96,800
    Affordability score: 23.6%
  3. Honolulu, HI
    Median home price: $598,000
    Median income: $96,800
    Affordability score: 23.6%
  4. Santa Ana, CA
    Median home price: $598,000
    Median income: $96,800
    Affordability score: 23.6%
  5. Nassau/Suffolk, NY
    Median home price: $380,000
    Median income: $101,800
    Affordability score: 39.6% — 5th worst

If you look at these markets, you can see that their pricing is still high compared to median incomes in those areas… and when you look a bit more deeply at why… most of these areas are places that a lot of companies are either already located or are locating too… and they are in typical areas that tend to be at the top end of the pricing scale anyway and have not been affected as much by foreclosures (at least… yet).

Tell me about the Benjaminz, Timmy!

This article hits home for me, literally.

Sure, I’m an Atlanta, GA resident now, but I was born and raised in the mid-west and these cities are still the homes of most of my friends and family.Β  When I was a mortgage broker in Columbus, Ohio we would write mortgages for properties in some of these cities and typical a water cooler convo would be about how ridiculously cheap you could purchase one.

A friend of mine bought a house in Youngstown, OH for something like $7K cash about 15 years ago and sold it for a whopping $24K about ten years later (ok, nothing exciting there but the sales price was about 3X the purchase price).Β  I was the loan officer on the sale and the seller was really happy about it (he sold it back in 2005 before the markets got rough too).

He charged about $600 a month for rent and sold it to his long time renter who did a good job keeping the house up while living there.Β  That’s really awesome cash flow for a $7K investment!!!Β  I guess the point is that even though these cities sound gloomy in this article, there’s tons of positive cash flow to collect with tiny capital risks.Β  Just think about how far $50K of private money could take a smart investor in one of these cities!

So, as a take away for you from this article… is to look at areas where the affordability index are still high (aka, where the median income is close to the median house purchase price) to buy rentals… and to find markets where you’ll find great buys.Β Β  Of course, do your due diligence on the areas you’re buying for rentals… but now is the time to once again get cashflowing properties… and PRIVATE MONEY is of course the easiest solution to get the funding to buy those properties.

Good luck!

– Tim

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