We look at home value-to-income ratio, median home prices, and other factors
As home prices continue to rise, many Americans are searching for affordable properties outside of the major centres. While New York, Los Angeles, and San Francisco continue to be out of reach for many prospective homebuyers, there are options. If you are willing to move, and are able to work remotely, you may be in luck. Here are 10 of the most undervalued housing markets in the US.
10 most undervalued housing markets
Dallas-Fort Worth, Texas. The home value-to-income ratio in Dallas-Fort Worth is 3.0 compared to the US national average at 3.3. When compared to other major cities, Dallas-Fort Worth looks even better: Los Angeles has a ratio of 7.9, Austin’s ratio is 4.0, and San Francisco is at 6.0. And compared with most of the places on this list, it has the highest share of the population between the ages of 25-44, comprising 29.1% of the population compared to the national average of 26.7%. It also helps that it is located in Texas, which has no state tax and affordable home prices.
Daphne-Fairhope-Foley, Alabama. In terms of population growth, this metro area in Alabama is one of the fastest-growing in the US. The increase in population between 2017 and 2020 was 7.8% compared to the national average of 1.3%. Weekly wages rose cumulatively 36.6% from Q2 of 2018 to Q2 of 2021, while house prices only increased by 17.7%. From 2018-2021, non-farm payroll employment increased at the second-highest rate of 5.7% compared to an overall drop in jobs of 1.4%.
Fayetteville-Springdale-Rogers, Arkansas-Missouri. The home value-to-income ratio here is 2.7, with Fayetteville metro seeing the largest cumulative job growth over the last three years. And wage gains have kept pace with the increase in home prices: from Q2 of 2018 to Q2 of 2021, house prices increased at a cumulative rate of 19.1%, with a 21% rise in average weekly wages for the same period. That strong job growth is expected to spur further wage increases this year, which may increase demand for homes—and boost prices.
Huntsville, Alabama. This area also boasts a solid home value-to-income ratio, coming in at 2.6. While home prices rose 24.6% compared to wage increases of 13.4% over three years, jobs have also increased (4.7%), as has population (5.6%). Both are higher than the national averages. Huntsville, Alabama, also earned the fifth spot for career opportunities out of a list of 200 metros.
Knoxville, Tennessee. This city offers some of the most affordable home prices of any place on this list, with a median property value of $288,878. With a home value-to-income ratio of 2.7, Knoxville has become an attractive place to move to, with 10,000 relocating there in 2020. However, home prices are increasing at a cumulative three-year pace of 22.4%, which is faster than cumulative wage growth (16.5%). This will likely matter less if you are a retiree. On a recent list Knoxville came in at number four for most affordable cities for retirees.
Palm Bay-Melbourne-Titusville, Florida. With a home value-to-income ratio of 2.9, Palm Bay-Melbourne-Titusville, Florida, is more attractive than other Florida metros like Miami (4.7), Orlando (3.9) and Sarasota (3.8). Over the past three years, this part of Florida has had the second-fastest wage growth (27.2%) of all the cities on this list. An added attraction for remote workers is that it has the highest share of households with broadband services, at 78.3%.
Pensacola-Ferry Pass-Brent, Florida. Pensacola-Ferry Pass-Brent, Florida, shares the same home value-to-income ratio as Palm Bay-Melbourne-Titusville. While this has been a hotspot for retirees, it has also become more appealing to remote workers due in part to its broadband service (74.2% of households) and its beautiful beaches.
San Antonio-New Braunfels, Texas. The San Antonio metro area has a median home value of just $227,784 and has the second highest (compared to Dallas) net domestic migration in 2020 at nearly 26,000 people. For the sake of comparison, other Texas metros compared this way in median home value: Austin at $410,653, Dallas at $293,976, and Houston at $245,098. Over a three-year period ending in 2020, that affordability spurred its population to increase by 4.8%.
Spartanburg, South Carolina. Two facts that make Spartanburg, South Carolina, a hidden gem on this list is its 2.5 home value-to-income ratio and its median home value of $181,571. Located between Charlotte and Greenville, Spartanburg also boasted the second-greatest population growth in the US from 2017 to 2020.
Tucson, Arizona. When compared to Phoenix, Tucson is very affordable. The median property value in Arizona’s second city is $261,046 compared to $364,186 in Phoenix. And when compared to many other undervalued markets on this list, Tucson had the third-largest net domestic migration in 2020 with 10,778.