The Best City to Buy a House Today
Home prices have risen at one of the fastest paces in history. The most recent similar period was in 2005 and 2006, just before the market imploded as part of the 2007 to 2009 financial crisis that led to the Great Recession. Prices were so high recently that they are beyond what millions of Americans can afford, except in a handful of markets.
Home price increases monthly topped at about 20% year over year in late 2021 and early 2022, according to the widely used Case-Shiller home price index. In several markets, including Miami, Phoenix and Tampa, the number was 30%.
The only mitigating factor to high prices has been low mortgage rates, which dropped to 3% on a 30-year fixed mortgage. In an effort to fight inflation, the Federal Reserve has raised its rates enough to push mortgage rates above 6%. That suddenly squeezes affordability out of the market.
The net effect of higher interest rates is that home prices have started to increase more modestly and even have dropped in certain cities. However, prices are still high enough to challenge what people can afford.
Realtor.com looked at the cities that are most affordable, even as home prices nationwide remain a challenge to most buyers. The report, titled Buyer’s Bonanza: The 10 Very Best Cities in America for Home Shoppers Right Now, reviews 10 markets out of the 250 cities it analyzed. The decision was based on home price per square foot, the percentage of homeowners cutting prices and the number of homes for sale compared to total homes in each city. It would seem price cuts are the most critical metric.
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George Ratiu, manager of economic research for Realtor.com, commented, “For some of these markets, it’s a return to balance especially where you saw lots of dramatic demand increases during the past couple of years.” He deemed these cities to be “buyer friendly.”
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The list was topped by Midland, Texas, where the median price of a home for sale is $343,730. That is slightly below the national number.
According to the Census Bureau, Midland has a population of 136,000. Average income in the metro is $112,701, well above the national average, which is another reason homes in the area are affordable.
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