Cities wth Inexpensive Houses

If your search for inexpensive houses is for the cheapest of the cheap, you can find some of those on the following pages:

Where To Find Cheap Homes - Places with houses priced under fifty thousand dollars or so.
Cheap Houses: More Places - Places where the homes sell for less than $30,000.
Cheap Towns to Live In - A 2011 update on many towns and cities with inexpensive homes.

This page is about inexpensive houses, but the focus is on those that are most likely to be a great value as well. In other words, a home that is $100,000, but is in an under-priced locale that will see good gains in prices is a better value than a $50,000 home that will sell for even less in five years. For those who read this in the future, note that I am writing it in 2010.

What makes a good housing value? As pointed out, it isn't price alone. In fact, one of the most important factors - and one that home owners often ignore - is the relationship between home prices and wages in an area. The median home price in the U.S. was 1.92 times median household income from 1988 to 2003. Then came the boom years, when that figure went to 2.77 for a variety of reasons. As you might imagine, when prices twice as high in relation to incomes, there can be problems. Thus we suddenly had more foreclosures than ever and falling prices across the country.

But not all areas were so over-priced to begin with. Then there are the areas of the country where prices have fallen back to reasonable levels. So where are the deals now? The following list is of cities where homes are selling for reasonable prices according to incomes. If the incomes are high in an area, higher prices can be sustained over time. If incomes are low, the prices have to be accordingly low to make it onto this list.

Fort Worth/Arlington, Texas

The price-to-income ratio here was a high 3.95 in the fourth quarter of 2005. By this year it had fallen all the way down to 1.89. That's even below the average for the 1990s. Prices are still falling a bit though, so it may be a better buy in 2011.

Washington, D.C.

Prices here rose quickly and then fell 31% after 2007, bringing the price-to-income ratio down to 1.12 as of the end of 2009. The average was 1.69 from 1988 to 2003, so the current prices are likely to be near a bottom. Keep in kind, though, that the ratio is based on the high average incomes in the area. If you do not have one of the high income jobs, the prices will not seem that affordable. In that case, you'll want to look at good values that are also very cheap, which brings us to our next locale for inexpensive houses...

Fayetteville, North Carolina

The boom never really came to town here, and homes remain affordable at a price-to-income ratio of 1.23, based on low incomes. In fact, as of May 2010, there are a number of two-bedroom homes here that start at under $20,000. With a previous ratio of 1.52 for the 15 years ending in 2003, it seems likely that prices will go up from the current levels.

Las Cruces, New Mexico

In the first months of 2006 the price-to-income ratio was a very high 3.03, and has now fallen to just 1.37. This doesn't mean that rices have fallen by more than half, though. Remember that this is a ratio, and part of the change can come from rising incomes. The latter bode well for the future, of course. Meanwhile, you can still find decent three-bedroom homes here for under $100,000.

Medford, Oregon

Prices here have dropped by about 25% from the top. This was due to the same causes as in the rest of the country, but also because the local timber industry had to shed jobs as the new-home market collapsed across the United States. The reason that prices did not fall further is that they were already low to begin with. The current price-to-income ratio is around 1, making it the lowest on our list. There are currently two-bedroom homes starting in the 50s and 3 bedroom homes starting in the 70s.

Inexpensive Houses - Other Locations

Here are a few of the other places where the price-to-income ratio is back to reasonable (or where it never was too inflated in the first place.

Cincinnati, Ohio: Price-to-income ratio of 1.41 versus an average of 1.46 from 1988 to 2003.

Mobile, Alabama: Price-to-income ratio of 1.52 versus an average of 2.18 from 1988 to 2003.

Phoenix, Arizona: Price-to-income ratio of 1.52 versus an average of 1.74 from 1988 to 2003.

Memphis, Tennessee: Price-to-income ratio of 1.17 versus an average of 2.13 from 1988 to 2003.

See the latest updates for 2012, with a look at inexpensive houses (in absolute terms), here: The Cheapest Homes in 2012.