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

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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 :-)

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 :-)

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.  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).  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.  That’s really awesome cash flow for a $7K investment!!!  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.  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.   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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Member Comments

9 Responses to “The Most (and Least) Affordable Cities In The U.S.”
  1. Jim says:

    I live in Warren, MI and am a real estate investor. If anyone would like to partner up and learn more how to earn above average returns backed by real estate, or split the profits, please email me at http://www.realworksllc@gmail.com

  2. Tim Cronin says:

    It figures that NY has the first and 5th worst areas, which are next to each other,coincidentally.
    Now will the guru’s believe me when I say LI is a different animal?Go do a PACER search for Nassau County going 1 month back;see if you get so much as 1 lead for over 900 cases pulled. Tells an investor all they need to know. Better be a cash in hand rehabber, and know what you’re doing.

  3. Jay says:

    Have turnkey properties available with managment services provided in Fort Wayne, Indiana.
    Second largest economic center in the state, two hours away from Indianapolis, Metropolitan population is 570,000, City population is 250,00. Median income is $45,000 and median home price is $95,000. Average rent is $600/month. Percentage of renters is 38%. We provide fully rehabbed homes, tenant under contract, a minimum 15% instant equity and positive cashflow to investors. If you would like more information, submit your contact information on our website and we will be in contact with you to discuss your goals and what you are wanting to achieve. Thanks

  4. Jay says:

    The website for Fort Wayne, Indiana is http://www.superiorprivatemoneyreturns.com

    Sorry about that.

  5. mark says:

    These values mean nothing. I live in Upstate Ny and the taxes on a 250K home are 8-12k depending on county. Why would I buy here when I can buy the same home down south for the same price and pay 70% less in taxes. For what I save in taxes I can buy a 400k home somewhere else. Price is misleading when you consider buying a home in a high tax state.

  6. Joan Kappes says:

    Yes, Indianapolis is the most affordable real estate market! Investing is all about “the numbers” AND a quality real estate and property management team. We have several single family homes available that are rehabbed, rented (with a quality property management company) and each property is already cashflowing. All the work’s been done for you! Please contact me with questions.

  7. Trevor says:

    Hey Mark,

    Thanks for the comment! Well… I agree and dis-agree w/ ya. With this article we simply were talking about “affordability” just based on purchase price and median income. And, the article of course doesn’t take into account other costs related to the purchase and ownership of a property like (as you mentioned) property taxes. That is something people of course have to take into account in their own due diligence before buying a property.

    But, a lot of investors out there aren’t buy and hold investors (which it sounds like you may be) and the property taxes for them aren’t as big of an issue because they’re just looking to buy and sell the house in a short amount of time… and, for those types of transactions an area where housing is “affordable” properties can tend to sell a bit more quickly.

    So, thanks for the comment! Agree w/ ya on the property taxes… but disagree that “values mean nothing”. Value means a lot… but it’s only one piece of the overall decision pie as you mentioned.

    Thanks!

    – Trevor

  8. Cola says:

    From the article referenced it appears the data from the 2nd “least affordable RE markets to buy a house” was replicated in the list above showing identical median prices & income for 3rd & 4th place. It appears that the correct article numbers should be …
    ==
    3rd place: Honolulu
    Median home price: $450,000
    Median income: $79,300
    Affordability score: 32.7%

    4th place: Santa Ana, Calif.
    Median home price: $411,000
    Median income: $86,100
    Affordability score: 37.6%
    ==
    Regards,
    Cola

  9. Thanks for the heads up Cola … we appreciate it!

    ~ P-Rid

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