When COVID-19 struck last year, many expected the housing market to crumble. However, despite a struggling economy and record levels of unemployment, many people were still buying a house for investment or as a primary residence. And the housing market data confirms the presence of high demand. A recent study conducted by Redfin of 400+ US metro areas revealed that the median home sale price rose 15% year over year to $322,616 in December 2020. This was the highest increase on record. New listings of property for sale were up 13% from a year earlier. 39% of properties that went under contract got an offer within the first 14 days on the market. It’s clear we ended the year in a seller’s market.
The question many are asking now is ‘Will prices continue rising in 2021?’ Yes, chances are very high that 2021 will see a further spike in home prices. As mortgage rates remain low and real estate remains a good investment for 2021, people will continue to flood into the housing market to look for property. This high demand will lead to more bidding wars that will drive house prices further up. Economists at Realtor.com predict that the median home price will rise by 5.7% by the end of the year.
Related: Will House Prices Go Down in 2021?
With prices rising across the nation, where can you find the most affordable real estate? After all, you probably have a budget in mind and you need to stick to it, despite the rising home prices. In this article, we explore some of the cheapest states to buy a house to help you find a good real estate deal.
The 8 Best States to Invest in Real Estate for Affordability in 2021
Wondering where to invest in real estate? If you are planning on buying a house for investment, you shouldn’t be too worried about the rising home prices. The best states to invest in real estate aren’t necessarily the most expensive ones. And with some research, you can still find some investment properties that are relatively affordable.
Based on Mashvisor’s housing market data, here are the cheapest states to buy a house in the US:
#1. Iowa
- Median Property Price: $230,620
- Price per Square Foot: $157
- Price to Rent Ratio: 18
- Monthly Traditional Rental Income: $1,082
- Traditional Cash on Cash Return: 3.0%
- Average Airbnb Daily Rate: $157
- Monthly Airbnb Rental Income: $2,118
- Airbnb Cash on Cash Return: 4.0%
- Airbnb Occupancy Rate: 53%
#2. North Dakota
- Median Property Price: $242,621
- Price per Square Foot: $116
- Price to Rent Ratio: 16
- Monthly Traditional Rental Income: $1,271
- Traditional Cash on Cash Return: 3.6%
- Average Airbnb Daily Rate: $102
- Monthly Airbnb Rental Income: $1,634
- Airbnb Cash on Cash Return: 3.1%
- Airbnb Occupancy Rate: 61%
Related: 2 New Ways to Find Cheap Investment Property for Sale
#3. Ohio
- Median Property Price: $249,141
- Price per Square Foot: $128
- Price to Rent Ratio: 18
- Monthly Traditional Rental Income: $1,169
- Traditional Cash on Cash Return: 3.2%
- Average Airbnb Daily Rate: $145
- Monthly Airbnb Rental Income: $2,134
- Airbnb Cash on Cash Return: 4.1%
- Airbnb Occupancy Rate: 58%
#4. West Virginia
- Median Property Price: $254,747
- Price per Square Foot: $122
- Price to Rent Ratio: 19
- Monthly Traditional Rental Income: $1,094
- Traditional Cash on Cash Return: 3.8%
- Average Airbnb Daily Rate: $186
- Monthly Airbnb Rental Income: $2,060
- Airbnb Cash on Cash Return: 4.9%
- Airbnb Occupancy Rate: 59%
#5. Indiana
- Median Property Price: $255,237
- Price per Square Foot: $124
- Price to Rent Ratio: 19
- Monthly Traditional Rental Income: $1,115
- Traditional Cash on Cash Return: 3.6%
- Average Airbnb Daily Rate: $134
- Monthly Airbnb Rental Income: $2,015
- Airbnb Cash on Cash Return: 4.1%
- Airbnb Occupancy Rate: 59%
Related: 8 Ways to Find Cheap Multi Family Homes for Sale
#6. Kentucky
- Median Property Price: $272,533
- Price per Square Foot: $389
- Price to Rent Ratio: 20
- Monthly Traditional Rental Income: $1,115
- Traditional Cash on Cash Return: 3.2%
- Average Airbnb Daily Rate: $182
- Monthly Airbnb Rental Income: $2,021
- Airbnb Cash on Cash Return: 4.4%
- Airbnb Occupancy Rate: 53%
#7. Mississippi
- Median Property Price: $285,687
- Price per Square Foot: $130
- Price to Rent Ratio: 20
- Monthly Traditional Rental Income: $1,200
- Traditional Cash on Cash Return: 3.5%
- Average Airbnb Daily Rate: $140
- Monthly Airbnb Rental Income: $1,912
- Airbnb Cash on Cash Return: 4.0%
- Airbnb Occupancy Rate: 58%
#8. Arkansas
- Median Property Price: $288,898
- Price per Square Foot: $129
- Price to Rent Ratio: 22
- Monthly Traditional Rental Income: $1,095
- Traditional Cash on Cash Return: 3.1%
- Average Airbnb Daily Rate: $138
- Monthly Airbnb Rental Income: $2,434
- Airbnb Cash on Cash Return: 5.1%
- Airbnb Occupancy Rate: 60%
How to Find and Analyze Properties in the US Housing Market 2021
Now that you are armed with a list of the cheapest states to buy a house, there are a few more steps you’ll need to take before you finally find that affordable, money-making investment property for sale. You could try to identify the affordable real estate markets within the state of your choice. Alternatively, you can dive right into your property search and Mashvisor can help.
Conclusion
If you do your homework, you should be able to find a great deal in the cheapest states to buy a house. Just remember, you’re looking for something cheap and profitable. Buying a house for investment that meets both of these criteria will be easier if you use Mashvisor’s real estate investment tools like our State Guides for your property search and the rental property calculator for your property analysis. To start looking for and analyzing the best investment properties, click here.