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Tips For Finding Cities With Affordable Housing

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City Cost Metrics

Key Factors Driving City Affordability

As inflation rises and more Americans are working remotely, many people are looking to relocate out of state to find more affordable cities. According to the 2022 Moving Migration Report, South Carolina, North Carolina, Tennessee, Arizona, and Florida were the most popular states for inbound migration. If you are one of the many Americans considering moving to another state or city to explore more affordable housing options, you need to know how to evaluate a city’s affordability to make informed decisions regarding your upcoming move. Below we have compiled tips for discovering the most affordable cities. We will provide a list of affordable housing options and advice for purchasing an affordable home.

Urban Value Index

WHAT MAKES A CITY AFFORDABLE?

Niche ranked the cities with the lowest cost of living in 2022, but as people set their sights on affordable cities, demand goes up and prices follow suit. Therefore, in our ever-changing economic landscape, it’s important to know what makes a city affordable and to determine the best sources for conducting your own affordability research. 

Affordability Drivers

Key Factors That Make Cities Affordable

There are seven key factors that make a city affordable for homebuyers:

  1. Cost of Living: A lower overall cost of living in the city can make it more affordable for homebuyers. If you’re moving from one city to another, use this cost of living calculator to compare the affordability between your current and future cities to determine the income you will need to maintain your current standard of living. If you haven’t decided on a destination yet, research the cost of living by state to narrow your options down according to affordability.
  2. Housing Costs: The median home price, homeowner’s insurance rates, and property taxes in the city have a big impact on affordability. Reach out to a Realtor to determine the median home price in your city of interest. If Florida is on your list, keep an eye on Real-ativity Market Updates to stay abreast of current home prices in Florida. Homeowner’s insurance rates vary widely in different regions of the country based on the risk of natural disasters and property crimes. Research home insurance averages to calculate affordability in your potential cities. Visit the County Property Appraiser’s website to calculate property taxes for your home purchase price point in your new city.
  3. Wages: Higher average wages can make a city more affordable for homebuyers. The US Bureau of Labor Statistics provides useful data on average wages by state and county.
  4. Housing Market Conditions: A buyer’s market, where there is an oversupply of homes and lower demand, can make a city more affordable for homebuyers. Keep an eye on the absorption rate in your areas of interest to determine if current market conditions favor buyers or sellers.
  5. Economic Conditions: A strong local economy, with low unemployment rates and a stable housing market, can also contribute to a city’s affordability. The US Bureau of Labor Statistics provides current unemployment rates by metropolitan area.
  6. Location: In most cases, cities located in more rural areas are more affordable compared to those in urban areas with a higher demand for housing. The suburbs can also offer more affordable housing options than major cities. However, be sure to factor in transportation costs if you plan on living in the suburbs and commuting to work in the city. Some areas have higher gas prices, tolls, parking, and car insurance rates. Suburbs with great public transportation can provide substantial savings.
  7. Tax Policies: Incentives and tax breaks for homebuyers offered by the local government can also make a big impact on city affordability. Aside from the warm climate and plethora of lifestyle amenities, The Sunshine State is also a popular retirement destination because of the tax benefits of Florida homeownership. Consider states with the best homestead exemptions to find affordable housing.

Market Value Hub

AFFORDABLE HOUSING OPTIONS

In addition to homeownership, there are several other affordable housing options, including:

  • Renting: Renting an apartment or a house can be more affordable than buying a home, especially in high-cost cities. On the one hand, renters don’t have to worry about expensive home repairs, property taxes, or homeowner’s insurance (renters’ policies to cover personal property are much cheaper than dwelling coverage). On the other hand, renters don’t acquire home equity over time in order to secure a better financial future. Renting can be a better option if you can’t qualify for a mortgage or don’t have the funds for a downpayment. However, you shouldn’t just assume that renting will be more affordable than buying. You should explore your options to do a fair comparison between the cost of rent and mortgage payments.
  • Public Housing: Public housing is owned and managed by the government and is available to low-income families, elderly individuals, and people with disabilities. Find out if you qualify for public housing by visiting The U.S. Department of Housing and Urban Development.
  • Section 8 Voucher Program: This program provides rental assistance to low-income families by subsidizing a portion of their rent. If you think you might qualify for Section 8, be sure to apply as soon as possible because the waiting lists are very long in most areas. Contact your local Public Housing Agency to apply for a Section 8 Voucher.
  • Co-Housing: Co-housing is a type of community living where residents live in individual units but share common spaces and resources, such as kitchens and laundry facilities. Co-Housing has become popular among parents and seniors looking for affordable housing options that also provide greater community support. Check out Cohousing.org to discover co-housing communities and browse listings.
  • Manufactured Housing: Manufactured housing, also known as mobile homes or trailers, can be a more affordable option for those looking for a place to live. Read the Real-ativity Mobile Home Guide to discover the risks and benefits of mobile home living.
  • Room Rentals: Renting a room in a shared house or apartment is usually more affordable than renting an entire unit. Realtor.com provides some good advice on finding a room to rent.
  • Affordable Housing Developments: Some cities and developers have created affordable housing developments specifically for low- to moderate-income families. Affordable Housing Solutions Florida is a non-profit organization that builds affordable housing developments in Florida, Georgia, Illinois, and Texas.

Market Value Hub

Tips For Purchasing an Affordable Home

  • Determine Your Budget: Establishing a budget is the first step in finding an affordable home. In order to budget for a home purchase, consider factors such as your income, monthly expenses, and the down payment you can afford.
  • Research Locations: Look for areas with lower median home prices, property taxes, and overall cost of living. While moving to a city that fits your lifestyle is important, you won’t be able to fully take advantage of a city’s amenities if you are spending too much of your income on housing and other living expenses. Great restaurants and theatres won’t do you much good if you don’t have any room left in your budget for entertainment.
  • Consider Fixer-Uppers: Homes that need some work can be purchased at a lower price and then renovated to increase their value. You will want to speak with a lender to ensure that you can buy a home in need of repairs with the type of loan you have been pre-approved for. You could be denied FHA financing if there are issues with the roof, plumbing, electrical, heating, cooling systems, or appliances. However, there are FHA 203K Renovation financing options that will allow you to purchase a home in disrepair and cover the cost of the dwelling and the renovations with one mortgage.
  • Work With a Real Estate Agent: A real estate agent can help you find homes that meet your budget and criteria while negotiating on your behalf to get the best deal. Negotiating a home purchase requires in-depth knowledge of the common negotiables in a real estate transaction. Furthermore, unless otherwise negotiated, the seller will pay your agent’s commission so you can benefit from the agent’s services without incurring significant extra charges. You should understand how real estate commissions work before proceeding with your home purchase.
  • Take Advantage of Down Payment Assistance Programs: Some government programs and non-profit organizations offer down payment assistance to eligible homebuyers. If you can afford monthly mortgage payments, but lack the savings to cover a down payment and closing costs, there are down payment assistance programs that can help you achieve homeownership.
  • Expand Your Search: Don’t limit your home search to popular areas or neighborhoods. Expanding your search to include areas with less homebuyer demand can lead to more affordable options.
  • Consider a Smaller Home: Smaller homes are often more affordable and require less maintenance. With a little creativity and good organization skills, you can make your space multi-functional to accommodate your needs with less space. Consider foldable desks for your home office or murphy beds to utilize the space in your bedroom as a living area during the day. Better Homes & Gardens provides some great tips for organizing a small home to make the best use of limited space.
  • Check for Incentives: Some cities and states offer incentives, such as tax breaks and grants, to encourage home ownership and make it more affordable. Check out this list of states that will pay you to move there for more information.

Conclusion

There are many important factors for assessing a city’s affordability. Take the overall cost of living, tax policies, wages, and local market conditions into account when selecting an affordable city for your upcoming move. Once you have located a city that fits your budget and lifestyle, consider affordable housing options such as cohousing or affordable housing developments. If you are able to purchase a home, don’t limit your home search to popular areas, tour smaller homes that allow for multifunctional spaces, determine your options for renovation financing to see if buying a fixer-upper is a viable option, and take advantage of down payment assistance programs. The possibilities for your next move are endless, be sure to explore your options with close attention to the data and an open mind for creative solutions.

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