Capitalizing on Value: Identifying America’s Most Promising Affordable Real Estate Markets

As Americans face increasing financial strain in 2023, many are tightening their budgets, and this trend is significantly impacting the U.S. residential real estate market. Homebuyers are turning to more affordable locales to meet their financial needs, and fortunately, they are discovering hidden gems in out-of-the-way places.

The Financial Strain on Americans

A recent study by Lending Club reveals that 64% of U.S. adults are living paycheck to paycheck, up from 61% just a year earlier (Lending Club, 2023). Even more concerning is that, for the first time since the study’s inception, over 50% of Americans with six-figure annual incomes report feeling “stretched too thin,” up from 42% during the same period (Lending Club, 2023).

Anuj Nayar, Lending Club’s financial health officer, explains that the effects of inflation are hitting Americans hard, and as the Federal Reserve’s efforts to curb inflation drive up the cost of debt, record numbers of Americans are living paycheck to paycheck (Lending Club, 2023).

The Search for Affordable Real Estate

With high home prices and rising mortgage interest rates, homebuyers are increasingly seeking more affordable places to live (Trapasso, 2023). Realtor.com’s analysis of the top “up-and-coming” U.S. real estate markets this spring highlights places like Lafayette, Indiana, as an example of a budget-friendlier option for otherwise priced-out U.S. homebuyers (Trapasso, 2023).

Other under-the-radar markets include Manchester, New Hampshire, and Columbus, Ohio, where prices remain reasonable, and there are plenty of lifestyle amenities, good schools and parks, and lower crime rates relative to larger U.S. urban locales (Trapasso, 2023). Notably, none of the “top 20” emerging markets identified by Realtor.com are located out west (Trapasso, 2023).

Hannah Jones, an economic data analyst at Realtor.com, notes that the demand for less expensive markets, particularly in Midwestern markets, is increasing (Trapasso, 2023). These markets didn’t experience the same price growth as larger cities during the COVID-19 pandemic, thus maintaining their affordability (Trapasso, 2023).

Here’s the full list of affordable U.S. home purchase markets as of spring, 2023, according to Realtor.com

Top 20 emerging real estate markets in Spring, 2023

1. Lafayette, IN ($289,000 median home list price)

2. Bloomington, IL ($339,000)

3. Elkhart, IN ($275,000)

4. Lebanon, PA ($372,000)

5. Fort Wayne, IN ($339,000)

6. Topeka, KS ($249,000)

7. Sioux City, IA ($305,000)

8. Omaha, NE ($345,000)

9. Springfield, IL ($144,000)

10. Manchester, NH ($550,000)

11. Janesville, WI ($331,000)

12. Columbus, OH ($375,000)

13. La Crosse, WI ($334,000)

14. Johnson City, TN ($413,00)

15. Springfield, OH ($172,000)

16. Hickory, NC ($349,000)

17. Burlington, NC ($368,000)

18. Columbia, MO ($367,000)

19. Waterloo, IA ($263,000)

20. Knoxville, TN ($470,000)

Conclusion

As Americans grapple with financial strain and tighten their budgets, the shift to more affordable real estate markets is becoming increasingly apparent. Homebuyers are discovering hidden gems in lesser-known markets that offer a high quality of life, reasonable prices, and the opportunity for locals and first-time buyers to afford a home based on local salaries. As the demand for affordable housing continues to grow, these emerging markets are poised to thrive.

Lending Club. (2023). Study reveals 64% of U.S. adults are living paycheck to paycheck. Lending Club.

Trapasso, C. (2023, April 26). Homebuyers increasingly seek out more affordable places to live. Realtor.com.