Although home value growth has slowed down, many US real estate markets remain unaffordable for the average homebuyer. However, as a real estate investor, you have the option of buying a rental property out of state. Because of this advantage, it’s key to know where the most affordable housing markets are. And just in time for the winter real estate market 2020 (the best time to buy a house for investment), ATTOM Data Solutions has released its Q4 2019 US Home Affordability Report revealing the least and the most affordable housing markets in the US.
Q4 2019 Real Estate Market Report
Taking a look at 486 counties in the US housing market, the report found that in 71% (344 out of 486), the median property price is still out of reach for the average US wage earner.
It’s important to note that ATTOM’s Housing Affordability Index takes into consideration the following:
- The percentage of income required to cover monthly housing costs including monthly mortgage, property tax, and insurance payments on a median-priced house
- A 3% down payment (note that for rental property investors, this would be higher- around 20% of the investment property price)
- A 28% debt-to-income ratio maximum
- Data from the Bureau of Labor Statistics on annualized average weekly wages
The report found that the cost of homeownership in the US housing market takes up 32.5% of income.
Read the full report here.
The 10 Least Affordable Housing Markets
The following are the 10 least affordable US housing markets from the 486 counties analyzed in the report:
- Los Angeles County, CA
- Maricopa County (Phoenix), AZ
- San Diego County, CA
- Orange County, CA (outside Los Angeles)
- Miami-Dade County, FL
- Kings County, NY
- Dallas County, TX
- Riverside County, CA
- Queens County, NY
- San Bernardino County, CA
The 10 Most Affordable Housing Markets
The following are the 10 most affordable US housing markets from the 486 counties analyzed in the report:
- Cook County (Chicago) IL
- Harris County (Houston), TX
- Wayne County (Detroit), MI
- Philadelphia County, PA
- Cuyahoga County (Cleveland), OH
- Franklin County, OH
- Oakland County, MI
- Allegheny County, PA
- Mecklenburg County, NC
- Fulton County, GA
Start your search for an affordable investment property for sale now.
Is the US Housing Market Becoming More Affordable?
While a significant percentage of the US counties analyzed remain unaffordable, real estate market trends show that affordability is very slowly but surely becoming less of an issue across the nation.
In Q3 2019, it was reported that 73% of US counties were unaffordable for the average wage earner, which was down from 75% in Q4 2018. In addition to this, mortgage rates are at a low as average wages continue to increase in a healthy job market and economy. So while real estate prices are still less affordable than historic averages in 49% of US housing markets, that number has significantly declined from 72% a year ago.
What’s More Important Than Affordability in Real Estate Investing? Profitability
As a real estate investor, pinpointing the most affordable housing markets and finding cheap investment property for sale should not be your only concern. While the list of counties above is a good place to start your investment property search, you cannot just buy the first property that fits your budget in the cheapest neighborhood.
Instead, you should look for affordable and profitable neighborhoods. You can do this easily with Mashvisor’s Real Estate Heatmap.
Mashvisor’s Real Estate Heatmap
Simply start by entering in a city and setting the filter for listing price. Find the areas marked in red (the most affordable). And then set the filter for cash on cash return and see which of those areas are marked in green (the most profitable). With that, you will have found the most profitable and affordable real estate markets. And you’ll have a list of investment property for sale to start analyzing. What’s more, you can even use this same strategy to find more affordable and profitable areas in some of the more expensive real estate markets listed above.
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