Everyone wants a dream home. But the reality is that we live in a world where home prices are becoming unattainable with each passing year. Luckily, there are places where you’ll find some of the most affordable cheapest houses in the USA.
The Zillow Home Value Index provides metrics determining how cheap or expensive a state’s real estate is. Factors that suggest affordable homebuying in various states include:
- Median home price
- State property tax rates
- House Price Index (HPI)
- Cost of living
If you have a limited budget for your dream home, consider investing in such areas to get the most bang for your hard-earned dollars.
Understandably, moving across states may seem like a drastic measure in your search for an affordable home. But it’s more common than you think. A survey by Redfin suggests that 20.5% of Americans would relocate if it meant getting a better deal on a house.
This shows that people place a premium on finding an affordable home, even if it means moving. You’ll be surprised to learn that many of these places, despite a low median home price, offer amenities similar to urban areas.
Additionally, a new place may also provide you with better opportunities, such as:
- Proximity to outdoor and cultural attractions
- Opportunity to be closer to your extended family
- A solid healthcare and education system for your family
If you’re willing to relocate, these are some of the cheapest housing markets in the U.S. to consider:
- West Virginia
- Indiana
- Delaware
- Ohio
- Kentucky
- Louisiana
- Arkansas
- Mississippi
- Alabama
- Iowa
Let’s look at each one in detail below.
West Virginia
The state of West Virginia has the lowest median home value in the U.S., at $143,200. It is the cheapest place to buy a house in the USA.
Besides the low homebuying costs, you will see that West Virginia also offers homebuyers tremendous value in terms of overall affordability and cost of living. Much of West Virginia’s real estate is built on rural farmland, giving rise to small-town communities with big-city amenities.
West Virginia is a growing choice for relocation if you’re considering retirement or have permanent work-from-home positions. Its stunning natural beauty, replete with national parks and seasonal foliage, inspires a peaceful living atmosphere that you may find lacking in bigger cities.
Besides the many quaint towns packed into West Virginia, the state is also home to decent college towns. Many parts of the state are undergoing revitalization efforts to promote modern, community-based living.
If you’re on a tight budget and looking to relocate, West Virginia has many affordable communities. Some of its topmost towns to live in include:
- Huntington
- Charleston
- Morgantown
- Parkersburg
All four of these towns are among the largest in the state but have a population under 100,000. You can invest in these small-town cities while they’re still expanding, as they’re most likely appreciate in the future. In the meantime, you can enjoy their small-town community vibe and low cost of living.
Indiana
If you’re up for Midwestern living, Indiana is one of the most affordable midwestern states to buy a home in. Housing costs in Indiana are a remarkable 21.7% below the national average. You will pay less than $200,000 for a single-family home in the Hoosier State, specifically around $185,505.
Adding to home affordability is also a low cost of living. This means a lower monthly expenditure, leaving more room for mortgage payments and savings. You can expect to spend less than 17% of your income on daily living expenses, much lower than the national average.
Indiana has a median household income of nearly $62,743. This income is lower than the national median of $74,580 but is still higher than other states in this list.
Another win for Indiana is its impressively low unemployment rate of 2.2%. The presence of world-class universities like Purdue and Notre Dame also sweetens the deal.
Indiana does have a few drawbacks you want to consider before finalizing your move. If you’re moving from a sunny region, you may be in for a bit of a weather shock; Indiana is known for its bitter-cold winters.
Despite its high employment rate, Indiana has its fair share of drug addiction problems. It’s wise to do research before deciding which town in Indiana best suits your needs.
Life in the Midwest can get boring, but university towns like South Bend have a lot to offer. Thanks to its student population, you’ll find it easy to live here on a budget. South Bend has several parks, trails, shopping, nightlife, and museums, so you’ll always find something to do here.
Marion is another affordable Indiana town you can consider while buying a home. It has a median home list price as low as $92,500.
Delaware
Delaware boasts one of the highest homeownership rates in the country. It ranks 11th among states, with a homeownership rate of 70.3%. One of the things that makes it so simple (and cheap) to buy a home in Delaware is the state’s low taxation.
Technically, Delaware has a higher median home value of $300,500 compared to other states on the list. Its cost of living is also higher, ranking 103 on the cost of living index. However, Delaware offers the following tax breaks to its residents:
- Low average annual homeowners insurance cost
- Low property taxes
- No state or municipal sales tax
The bottom line is that even if you spend a lot of money buying a home in Delaware, the low property taxes and insurance costs will make the deal worthwhile.
Delaware is also one of the places where you can build a home on a plot of land for less money than in other states. You may find it cheaper to build a home here instead of buying one.
You can take your pick from booming communities like Wilmington, Middletown, and Hockessin in Delaware. While many of Delaware’s communities have a rural vibe, they offer good proximity to services and amenities.
There’s also plenty to do here with your family, whether it’s driving to the beach (most beaches are less than two hours away) or visiting a state park.
Delaware’s real estate market is strong, with prices unlikely to drop. With such a growing market, now is a good opportunity to buy a property in this area.
Ohio
Ohio is the ninth-cheapest state in the country to buy a home in. A report by Ohio Realtors stated that the median home price in Ohio in September 2023 was $275,461. This is nearly $100,000 less than the national average for the same month.
If you’re wondering why housing prices in Ohio are so low, here’s what you need to know:
- Ohio real estate has a healthy supply-demand ratio due to its low population density. In recent years, the state hasn’t seen a remarkable rise in population.
- Meanwhile, there has been a steady rate of home construction in Ohio, making a range of housing units available to eager homebuyers. This favorably skewed supply-demand ratio keeps prices in check.
- You can live comfortably in Ohio’s major cities even on an average budget, thanks to its low cost of living and tax breaks.
- Lastly, Ohio has a thriving economy with plentiful job prospects. This creates a strong albeit manageable rental demand that doesn’t strain its housing market.
Two affordable Ohio cities you can consider investing in are:
- Toledo
- Youngstown
Kentucky
If you prefer big-city vibes with access to farmland, Kentucky offers the best of both worlds at low prices. Kentucky has some of the cheapest real estate in America. The Zillow Home Value Index ranks the Bluegrass state as the sixth-cheapest state for buying a home in the U.S.
With a median home value of $173,300, you can purchase a home for under $200,000. The low cost of living is the icing on the cake.
A single-family home can cost you as little as $197,627, nearly half the price of the average U.S. home. You will even save considerably on property tax, which is 0.80%.
Kentucky towns are also ranked high in terms of affordability, as you pay 8% less than the national average for daily expenses.
Despite its modest prices, Kentucky offers a fun-filled lifestyle with several activities. The state has everything, from the famous Kentucky Derby to the great outdoors.
If you prefer urban living, you can live it up in major cities like Lexington or Louisville. If you prefer a slower pace of life, Kentucky’s rural communities offer excellent off-the-grid living opportunities.
Louisiana
The birthplace of Cajun cuisine and jazz and blues, Louisiana saw a sizable drop in home prices over the last two years. House prices in the Pelican State fell by at least 8% from March 2022 to 2023. The median home price in the state also fell by 3.2% to $195,356. It is now 46% below the national average.
If these stats are anything to go by, you can find a good-sized home in the state within your budget. Its stable market offers many housing options, from urban towns to rural settlements.
Besides low home prices, the state also has a 10% lower cost of living than the national average. Natural resources abound here, reducing the overall costs for groceries and utilities.
You can consider investing in real estate in Louisiana’s major cities like Baton Rouge, Lafayette, and New Orleans. These cities have high quality-of-life rankings. If you enjoy small-town living, communities like Lake Charles, Alexandria, Monroe, and Houma offer small-town Southern charm at affordable rates.
Despite the low housing prices, healthcare costs are higher here than in the rest of the nation. You’ll also need to factor in high crime rates and vulnerability to natural disasters in this state.
Arkansas
Arkansas is another state with some of the cheapest real estate in the U.S. It has a median home value of $197,411. Obtaining a mortgage would be a fairly hassle-free expense here. On average, you would pay less than 21.5% of your earnings toward your monthly mortgage.
Arkansas is also seeing a sizable wage increase across its central, northeast, and northwestern regions. Year-over-year wages are up 4.4%. The cost of living and low home prices in the Natural State means you can save more money.
While homeownership is an affordable affair in Arkansas, so is land ownership. If you’d prefer to build a home instead of buying one, you can easily do so due to its low land prices. Some reasons for these low housing and land prices include:
- A major rural economy with a reduced commercial and residential demand
- Low population density, with 58.4 people per square mile
- Less demand for land due to a scarcity of natural resources and limited water access
You’ll also be pleased to know that property taxes in Arkansas are quite low at 0.57%.
Home to the wild Ozark landscape, Arkansas offers a diverse and affordable housing market to suit your budget or lifestyle. Some of these places are:
- Fort Smith
- Jonesboro
- North Little Rock
- Little Rock
- Conway
When combined with a low cost of living and a smaller monthly mortgage, you can make homeownership a reality in Arkansas.
Mississippi
With a median single-family home costing roughly $140,818, Mississippi has some of the cheapest houses in the U.S. You will find the lowest average housing costs here, at 33.7% below the national average.
Food, utilities, and the total cost of living are also low, making it easy to live on a budget. That said, the reasons for the low-priced homes aren’t exactly promising. Mississippi is the poorest state in America, with a poverty rate of 19.5%, per the 2019 U.S. census.
With a major population living below the poverty line, the demand for homes is lower. As a result, homes are priced lower and are therefore more affordable.
If home affordability is the only concern, you will find Mississippi a good option to buy your home in. However, you’ll have to accept that this affordability comes at a cost, namely a lower quality of life and a debilitating economy, healthcare, and education system.
Alabama
Alabama has one of the cheapest median home prices in the country, at $170,184. Housing costs are 29.9% lower than the national average, which bodes well for homeownership. You will also save money on transportation and healthcare here.
Alabama boasts a low cost of living, but you should know that it ranks among the nation’s poorest states. However, the unemployment rate here is impressively low, at 2.9%.
You’ll spend less on property taxes in Alabama, which has the second-lowest property rates in the nation at 0.43%. If you’re a first-time homebuyer, you can benefit from its statewide homebuyer programs that make the path to homeownership even easier.
While safety is an issue in some parts of the state, a few cities are safe and beautiful to live in. From Gulf Coast beaches and college towns to historical cities, you can enjoy Alabama’s southern hospitality and low-cost homes in these cities:
- Talladega
- Gadsen
- Birmingham
- Bessemer
- Attalla
Iowa
Iowa is another midwestern gem for homebuyers, with some of the cheapest homes in America.
In Des Moines, Iowa’s thriving capital, you’ll find that 73% of millennials own rather than rent homes.
Affordable housing is one of the main reasons Iowa’s millennial population finds it easy to buy a home. At a median home value of $201,215, Iowa’s housing costs are nearly 24% below the national average. A single-family home will cost you even less, at $167,036.
Another reason is the affordable down payment. It can take you a little over five years to save for a down payment on a home in Iowa, compared to the U.S. average of 8.9 years. If you obtain a conventional home loan in Iowa through a statewide assistance program, you put down as little as 3%.
Iowa has an agricultural landscape, serving you the best of urban and countryside living. The friendly people, robust economy, and educational system are a bonus. If you want to start a family, this state is one of the best and cheapest places in the country to plant your roots.
Some of the cheapest places you can consider investing in include:
- Cedar Rapids
- Sioux City
- Dubuque
- West Des Moines
- Iowa City
Other Cheapest Places to Buy a House in the USA
Aside from the places mentioned above, other states offer similar budget-friendly options. From state-assisted loan programs to median home prices of less than $250,000, these are the other states you can consider for a cheap house in the U.S:
- Kansas
- Oklahoma
- Illinois
- Missouri
- Michigan
- Nebraska
- Wyoming
Tips for Bagging a Good Deal in Any Housing Market in the U.S.
There may be a way to sort your finances and get your mortgage game in order in your current housing market. These are some tips you can apply:
- Work with an agent: If you’re a first-time homebuyer, you’ll need someone who knows the lay of the land. This is not to say that you shouldn’t do your research.
Stay current on housing trends, and make a list of non-negotiables before enlisting the help of an agent. Once you know what you want, your agent can help you find suitable deals.
- Monitor the housing market: While it’s true that the housing market doesn’t change overnight, you can still locate a good deal in your neighborhood or city. Life circumstances can prompt people to sell homes at lower prices, so keep an eye out for good offers in your neighborhood.
Otherwise, wait till there is a buyer’s market and a solid housing inventory for a better advantage.
- Shop around for lenders: Many consumers make the mistake of going directly to one lender without considering others when getting a mortgage. The truth is that lenders’ requirements vary greatly.
Some lenders may be more tolerant toward credit history, while others may be stringent when it comes to prior debt. The idea is to shop around, research, and compare multiple lenders before settling on one that best fits your needs.
- Clear any past debts: Before you apply for a mortgage, you want to ensure that your credit history is favorable. If you’ve racked up big credit card bills in the past, you should clear these before applying for a loan.
Even after clearing debts, you should try saving enough money to convince the lender you’re good for your mortgage. A low debt-to-income ratio is crucial and can decide the amount of money granted to you.
- Maintain your credit score: During your home search, ensure you pay your credit bills on time. Clear bills as soon as they arrive to make the next step of mortgage preapproval easier. Doing this will improve your credit score and instill trust in the lender.
Navigating the Cheapest Housing Markets in the U.S.
Mortgage rates are declining. The end of January’s first week recorded the 30-year fixed rate at 6.62%. Despite this, many budget buyers are disillusioned with the idea of homebuying. This is because:
- Housing inventory is at a historic low.
- Home prices are high.
At a time like this, prospective homebuyers can find solace in the affordable states listed above. Many of these states have a roster of homes below the median price of $200,000. Other living costs are also less inflated in these states, with several offering modern conveniences despite small-town living.
This means you won’t necessarily have to compromise your lifestyle if you buy an out-of-state budget home.
But before picking a place to live based on just the median home price in a state, you want to consider other factors, including:
- The property taxes you’ll pay
- The overall cost of living
You also want to spend time researching the median income and job growth. This way, you can save a lot of money even after paying your monthly mortgage.
Lastly, you want to see if the state you’re considering moving to is compatible with your lifestyle. Living there entails being able to do things that align with you and your family’s interests. This is the only way to get the most value on your investment.
The idea is to find a golden ratio that suits your family’s lifestyle and budget. And who knows, with the right research and a bit of luck, you might find your dream home just one state over.
