Most Affordable Metros for Homeownership

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by on April 28, 2014

64.7% of Americans are homeowners, according to a new study from the National Association of Home Builders. However, homeownership rates differ dramatically from city to city. NerdWallet took a look at more than 173 U.S. metro areas to determine where homeownership is most feasible for the average consumer. Compare this list to our ranking of Least Affordable Metros for Homeownership.

Methodology

By dividing the home sale price by the median household income in each metro area, we determined affordability of homeownership. The lower the ratio of median home price to household income (home-price-to-income ratio), the more affordable the metro area is. In today’s economic environment, it is increasingly important that consumers are aware of their homeownership options. Learn more about current mortgage rates and mortgage refinancing options in our mortgage guide, as well as whether it’s best to rent or buy.

Where does your hometown fall? 


Most and Least Affordable Metros for Homeownership

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Most Affordable Metros for Homeownership

Jump to your metro area by population:

  1. Small Metro Areas (Population of less than 300,000)
  2. Medium Metro Areas (Population between 300,000 and 1,000,000)
  3. Large Metro Areas (Population over 1,000,000)

Small Metro Areas (Population of less than 300,000)

Metro Area Median Household Income Median Home Price Home Price to Income Ratio
1 Rockford, IL $49,752 $86,700 1.7
2 Decatur, IL 46,165 85,200 1.8
3 Springfield, IL 55,588 116,900 2.1
4 South Bend-Mishawaka, IN 45,056 95,200 2.1
5 Peoria, IL 53,925 114,400 2.1
6 Topeka, KS 49,780 109,000 2.2
7 Fond du Lac, WI 53,399 118,300 2.2
8 Kankakee-Bradley, IL 49,994 111,500 2.2
9 Elmira, NY 48,128 111,100 2.3
10 Binghamton, NY 48,114 111,600 2.3
Median 2.1
Min 1.7
Max 2.3

In 2013, Illinois showed up three times in NerdWallet’s list of most affordable places to buy a home, and this year all three metros show up again, alongside other areas like Peoria and Decatur. If you’re on the fence about buying a home, it may be a great time to get in touch with real estate agents to find the best deal. For more information on the local Illinois housing market and home financing market, the Illinois Association of REALTORS offers local market updates, and the REALTOR Association of Southwestern Illinois offers monthly housing statistics like this February 2014 update.

Medium Metro Areas (Population between 300,000 and 1,000,000)

Metro Area Median Household Income Median Home Price Home Price to Income Ratio
1 Toledo, OH $45,078 $81,700 1.8
2 Lansing-E.Lansing, MI 50,185 102,200 2.0
3 Ft. Wayne, IN 50,082 106,600 2.1
4 Dayton, OH 47,421 106,500 2.2
5 Davenport-Moline-Rock Island, IA-IL 51,005 114,600 2.2
6 Akron, OH 49,936 118,500 2.4
7 Rochester, NY 53,155 126,300 2.4
8 Syracuse, NY 52,230 125,500 2.4
9 Wichita, KS 50,511 122,200 2.4
10 Mobile, AL 42,973 108,400 2.5
Median 2.3
Min 1.8
Max 2.5

Ohio has the most appearances in our ranking for medium-sized metro areas, with Toledo grabbing the first spot, with a home-price-to-income ratio of 1.8. If you’re looking for local advice about purchasing a home, the Ohio Association of REALTORS offers tips on what a real-estate agent can do for you, and the Cincinnati Area Board of REALTORS publishes weekly newsletters to help consumers stay abreast of local real estate news.

Large Metro Areas (Population over 1,000,000)

Metro Area Median Household Income Median Home Price Home Price to Income Ratio
1 Cleveland-Elyria-Mentor, OH $48,952 $117,700 2.4
2 Atlanta-Sandy Springs-Marietta, GA 57,470 139,500 2.4
3 Cincinnati-Middletown, OH-KY-IN 54,779 135,900 2.5
4 Saint Louis, MO-IL 54,109 134,300 2.5
5 Indianapolis, IN 53,324 136,700 2.6
6 Columbus, OH 54,628 142,800 2.6
7 Kansas City, MO-KS 56,826 154,800 2.7
8 Memphis, TN-MS-AR 47,477 129,400 2.7
9 Louisville, KY-IN 49,435 139,500 2.8
10 Minneapolis-St. Paul-Bloomington, MN-WI 66,751 196,200 2.9
Median 2.6
Min 2.4
Max 2.9

Indiana joins Ohio as one of the best states for affordable homeownership, with Cincinnati-Middletown, Indianapolis and Louisville all representing Indiana in the ranking for large metro areas. For local advice on whether to buy or rent, residents can turn to the Indiana Association of REALTORS, as well as regional associations like the Greater Northwest Indiana Association of REALTORS, Southern Indiana REALTORS Association and REALTORS Association of Central Indiana.

Key Trends

  • The most affordable metros for homeownership are primarily in the North Central and mid-Atlantic regions, whereas most of the least affordable metros line the East and West coasts
  • Residents in the North Central area enjoy the most affordable housing
    • Illinois, in particular, makes seven appearances across our Most Affordable rankings, the highest of any state
  • Differences in home prices, not gaps in household income, determine housing affordability in metro areas
    • Median household income in “least affordable” metro areas is 1.2 times higher than “most affordable” metro areas. However, the median house price in “least affordable” metro areas is 2.2 times higher than “most affordable” metro areas.

Data came from the US Census and the National Association of REALTORS
Suburban neighborhood image from Shutterstock

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