Expensive property prices in the majority of U.S. cities prove challenging for local homebuyers, according to a recent study, which identifies only two urban areas where housing remains relatively affordable.
In the current housing market, affordability remains a significant concern for potential homebuyers across the United States. However, there are some bright spots, with cities like Detroit, Pittsburgh, and parts of Iowa standing out as more affordable options.
These cities share key contributing factors that make them attractive to budget-conscious buyers. One of the most significant factors is the comparatively low median home prices relative to local incomes. In Pittsburgh, for example, a household earning the median income still has about $11,244 left annually after paying a typical mortgage, reflecting very affordable housing relative to income. Detroit offers similar affordability, with room to spare in annual income after mortgage costs.
Economic conditions, including income levels and local market dynamics, also play a crucial role. Lower home prices are often found in cities with slower price growth or less demand pressure, making them more accessible. This is true for Detroit and Pittsburgh, which have median home values well below expensive coastal markets.
Location in less expensive regions also contributes to the affordability of these cities. Iowa’s affordability is partially influenced by its Midwestern location, where housing costs tend to be lower than national metro averages. However, Iowa faces some challenges from higher homeowners insurance costs due to weather risks like tornadoes and flooding, which can influence total housing expenses but do not outweigh the overall affordability.
Other costs of living, including utilities, taxes, and insurance, tend to be lower or manageable compared to pricier urban areas in these cities, making them more attractive for buyers on a budget.
Homeownership in these affordable cities offers several benefits. According to a recent study, homeowners have a median net worth of $400,000 compared to just $10,400 for renters. This wealth-building potential is one of the primary ways homeownership can contribute to generational wealth.
However, the unaffordability of housing in many other parts of the country impacts school quality, neighborhood safety, and upward mobility, changing the fabric of communities. In 48 of the 50 largest metropolitan areas, a median income can't purchase the median-priced home. This trend is concerning for experts, who say that having only two major U.S. cities that are affordable to potential homeowners is worrisome and points to more significant issues in the country's housing system.
As the rise of remote work gives buyers more options, the affordability of mid-sized markets becomes increasingly important. Prices in these markets are still approximately 50-60% higher than they were five years ago, but they offer a more accessible path to homeownership compared to expensive coastal cities.
In conclusion, affordability in Detroit, Pittsburgh, and parts of Iowa in 2023 is largely driven by comparatively low home prices aligned with median incomes, supported by regional economic and market factors, despite some localized risks impacting insurance costs. These cities present a promising outlook for potential homebuyers seeking a more affordable path to homeownership and the benefits it offers.
Sources:
[1] Erin Cogswell. (2023). Affordable Housing in 2023: A Look at Detroit, Pittsburgh, and Iowa. [Article]
[2] Clever Real Estate. (2023). Study Finds Only Two U.S. Cities Affordable for Median-Income Homebuyers. [Press Release]
[3] Erin Cogswell. (2023). The Most Affordable U.S. Cities for Homebuyers in 2023. [Article]
[4] National Association of Realtors. (2023). 2023 Housing Affordability Report. [Report]
- To expand their investment portfolios, many budget-conscious buyers are considering the real-estate markets of Detroit, Pittsburgh, and parts of Iowa, given their affordability and promising outlook in 2023.
- In the garden of homeownership, these cities promote growth by offering lower median home prices relative to local incomes, which allows for savings, as demonstrated in Pittsburgh with approximately $11,244 left annually after a typical mortgage.
- While some challenges, such as higher homeowners insurance costs in Iowa due to weather risks, might affect housing expenses, these cities still present substantially more affordable options in the decor of the United States' expensive coastal markets, making them alluring for both first-time buyers and investors.
