Potential homebuyers are currently being priced out of popular urban centers like New York City, San Francisco, Boston, or Los Angeles. Many of them have chosen to head to the suburbs or nearby commuter cities, or simply move to another city altogether. Others have chosen to sacrifice personal space and opt for co-living, to be able to live in hip downtown areas close to shopping and entertainment.
They have a good reason, too; over the past 20 years, home prices have skyrocketed to such a degree in some cities, that you would need a pretty hefty income to be able to afford to buy a home there.
For instance, $76,414 per year would be enough to buy you a single-family home in San Francisco in 1999, without spending more than 30% of your income on your mortgage. Fast forward to 2019, and you need to earn $308,763 per year to make that happen, as a single-family home in the city costs an average of $1.4 million in 2019, according to Zillow.
Yet the situation in San Francisco is not unique; other major cities have also seen tremendous increases in home prices, due to an influx of tech-savvy workers and the rise in tech salaries. Los Angeles, Oakland, San Jose, Boston, NYC, and Seattle are all in a similar predicament, having recorded higher and higher prices each year since 1999.
However, this rapid surge in home prices doesn’t apply to all American cities. You still have a chance of making that homeownership dream come true in some U.S. cities, where a one-bedroom apartment or a single-family home are significantly more affordable.
We combed through the data and looked at the U.S. cities where buying a home is still a dream worth pursuing. We came up with two separate lists of cities that recorded the smallest 20-year jumps in prices for single-family homes and one-bedroom apartments. The differences are massive if you compare these cities to the super-hip, Millennial Meccas we talked about before. If a single-family home in San Francisco will require you have $1.4 million in your pocket in 2019, in Chicago, a single-family home will only cost you $211,500. In Cleveland, a single-family home costs $54,900 on average in 2019 - $1.38 million less than a home in San Francisco. What’s more, in Cleveland, home prices recorded a 14% decrease since 1999, the only city on our list to do so. Cities like Memphis, Albuquerque, Wichita, and Columbus also saw modest gains in home prices over the years, making them a lot more affordable than top-tier cities like New York City or Los Angeles.
Check out the cities where the American dream is still within reach:
In the end, it all boils down to budget and preferences. If the idea of saving up money for decades or putting aside most of your monthly income for a mortgage payment sounds incredibly unappealing to you, and you’re not tied down to or dead set on living in a certain city, then you might want to consider relocating.
Sure, Cleveland or Indianapolis might not be as hip as L.A. or Manhattan, but you might just be able to enjoy life a bit more in these cities. Forget the insane traffic, the super-small apartments and the wallet-crushing cost of living; in these ten cities you’ll be able to own your own home, and still have enough money to do other things that make you happy. So, what’s it gonna be - the hip factor or the quality of life?
Data sources: Census Bureau, Zillow.