If you owned a home between 2005 and 2009, there is a strong chance that you lost a good chunk of change on your investment. If you were lucky enough to sell at the top of the bubble and rent during the subsequent downturn, you’re probably still reveling in the afterglow of your fortuitous decision.
Fortunately, many U.S. housing markets have recovered (at least somewhat) from the trauma of the late 2000s. Some pockets of weakness remain, and while just one-sixth of U.S. markets have recovered to pre-recession price levels, things are looking up.
As prices continue to rise, it’s worth investigating whether any affordable markets remain – and, thankfully, some do. This list features 10 American housing markets – scattered about every region of the country – that remain classic buyer’s markets. With generally affordable prices, ample supplies of attractive homes, and good prospects for further price appreciation, these metro areas should be at the top of every bargain-seeking home buyer’s list.
What Makes a Buyer’s Market?
In the world of real estate, the term “buyer’s market” describes a local or regional market in which the supply of housing outweighs the demand for housing. Buyer’s markets are marked by relatively affordable prices, negative gaps between asking prices and selling prices, a generally slow pace of home sales, and certain other telltale factors.
These conditions can be frustrating for sellers who want nothing more than to sell their homes and move on with their lives, but they’re great for patient buyers who seek long-term investment opportunities – or who just want to upgrade to a better home at a reasonable price. Since they feature low prices and ample supply, buyer’s markets are particularly attractive for first-time home buyers. And with the rise of online data aggregators such as Trulia and Zillow, identifying and capitalizing on buyer’s markets is easier now than ever before.
Important Criteria That Affect Housing Affordability
Real estate professionals use a variety of metrics to classify buyer’s markets. Each figure tells prospective buyers something about the overall strength and affordability of a given housing market:
- Median Home Price. The median price for homes sold within the metro area is critical to determine whether the area is affordable for regular home buyers.
- Selling Price Discount to List Price. When homes sell at a premium to their asking prices, it suggests that demand outpaces supply in the market. In true buyer’s markets, homes usually sell for less than their asking prices. On each list, areas where homes sell for such a discount are noted by a “-” symbol, followed by a percentage. Areas where homes sell for a premium to their list prices are noted by a “+” symbol, followed by a percentage.
- One-Year Change. The change in median home prices over the preceding 12 months is a good indicator of overall price momentum in the market. Rapidly appreciating prices indicate that a buyer’s market may soon be ending. Falling prices, meanwhile, are often indicative of an ongoing buyer’s market. While one-year price drops can also mean that a market is overvalued and needs to correct to a lower price level, buyers can avoid getting stuck in a falling market by looking at the overall one-, three-, and five-year price trends. When the rate at which prices have fallen appears to be slowing – in other words, if the one-year change is either positive or only slightly negative after sharper three- and five-year drops – buyers can be more confident that they’re getting in near the bottom of the market.
- Three-Year Change. This medium-term figure measures price momentum over a longer period of time and hints at the overall strength of a buyer’s market. Since the national home-price average has risen slightly over the past three years, markets that post a drop may be undervalued – and, therefore, may be good candidates for opportunistic buyers.
- Five-Year Change. This longer-term metric shows how home prices have fared since the depths of the financial crisis and recession. While most buyer’s markets have posted price drops during this period, markets with especially large drops may have structural/economic issues that could get in the way of any price recovery. While buyers should be wary of such markets, many – especially those in Sun Belt locales such as Florida, Arizona and California – are simply still regaining ground from the catastrophic price drops of the late 2000s.
- Average Time on Market. This metric represents the average amount of time that elapses between a home’s listing date and closing date in each market. Lower “time on market” figures indicate elevated demand for homes. Buyer’s markets tend to have larger “time on market” figures. This data may not be available for some of the smaller cities on the list.
- Days of Supply. This figure is a bit more abstract, as it describes how long it would take for each market to run out of listed homes, providing home sales continued at their current pace and no new homes came onto the market. Despite its hypothetical nature, it’s a great indicator of the relationship between housing supply and buyer demand in each market. Housing markets with larger supplies of homes for sale (as indicated by a larger “days of supply” number) tend to have depressed prices and slow price appreciation. This can be good news for buyers, especially those who have longer time horizons. Like “time on market,” “days of supply” data may not be reliable or available in smaller markets.
- Foreclosures per 10,000 Homes. While a high foreclosure rate may point to ongoing problems in affected housing markets, it also suggests that bargain-hunting buyers can find plenty of homes for sale at below-market prices.
- Local Unemployment Rate. It’s not directly related to housing, of course, but the unemployment rate is a good indicator of a metro area’s overall economic health. Economically strong regions that continue to experience housing market softness – as indicated by elevated housing supply figures, slow sales rates, and falling prices – may soon turn the corner, creating lucrative opportunities for home buyers who time their purchases just right.
Best Residential Buyer’s Markets in America
1. Little Rock, Arkansas
Little Rock is a low-key, economically vibrant regional capital that attracts talent and investment from a broad catchment area. Nestled in the beautiful Arkansas River Valley, it’s known for a warm but not oppressive climate and a livable urban footprint that knocks on the door of the Ozark and Ouachita Mountains.
Little Rock isn’t home to Arkansas’s best-known employer – that honor goes to Bentonville, home of Walmart, in the state’s northwest corner – but organizations such as the University of Arkansas for Medical Sciences and the Clinton Foundation draw skilled transplants from all over the country. And the city’s impressive cluster of nonprofit organization makes it a prime destination for do-gooders.
Little Rock’s housing market avoided the sharp fall that afflicted many other parts of the country. The flip side of this apparent good fortune is that the city’s prices haven’t increased by very much since the recession’s nadir. In other words, housing in Little Rock is a safe but unspectacular investment. Buyers can look forward to sale prices at decent discounts to list prices, and an ample supply of below-market foreclosures.
- Median Home Price: $122,300
- Selling Price Discount/Premium to List Price: -2.78%
- One-Year Change: +2.1%
- Three-Year Change: +0.8%
- Five-Year Change: +4.3%
- Average Time on Market: 115 days
- Days of Supply: 129 days
- Foreclosures per 10,000 Homes: 7.9
- Local Unemployment Rate: 6.7%
2. Toledo, Ohio
Thanks to its convenient but ignominious location near the heart of the Rust Belt, Toledo suffers from an image problem. It enjoys close economic connections to Detroit – in fact, it was once the world’s principal supplier of automotive glass – and outsiders tend to lump it in with its larger, much worse-off neighbor to the north. While Toledo’s economy does remain subdued, nearby communities have added thousands of decent-paying jobs over the past decade. What’s more, bargain-basement land and housing prices are proving to be irresistible for real estate investors and urban pioneers who know a good deal when they see one.
Its sheer affordability is what stands out the most about Toledo’s housing market. The Toledo area is home to nearly a million people, but the city’s median home price remains less than $100,000. This figure is rising quickly – prices rose by nearly 9% in the last year alone – so there may not be much time left for buyers to get in on its once-in-a-generation deals. For experienced real estate investors, a relatively low foreclosure rate may limit the supply of flippable houses.
- Median Home Price: $98,800
- Selling Price Discount/Premium to List Price: -4.2%
- One-Year Change: +8.9%
- Three-Year Change: +6.2%
- Five-Year Change: -3.0%
- Average Time on Market: 112 days
- Days of Supply: 148 days
- Foreclosures per 10,000 Homes: 4.9
- Local Unemployment Rate: 8.7%
3. Reading, Pennsylvania
Tucked into the fertile hills beneath the Allegheny Front, picturesque Reading is one of those older industrial towns that young, ambitious professionals tend to bypass in favor of bigger, more dynamic cities like Philadelphia, which lies about 60 miles to the southeast. There are dozens of cities like this in the Northeast; many of them are beautiful, and all of them have seen better days. Thanks to two generations of de-industrialization and the long-ago closing of the region’s coal mines, Reading’s economy is perennially soft. At nearly 13%, its unemployment rate is among Pennsylvania’s highest.
But if you look closer, you’ll find that Reading offers tremendous opportunity. It’s strategically positioned between Philadelphia’s affluent western suburbs and the state capital of Harrisburg. It’s also not far from some of Pennsylvania’s most popular outdoor attractions, including Gettysburg National Battlefield and Lancaster County’s Amish country.
Closer to home, there are signs of economic life as well. The big manufacturers and miners that built the town are gone for good, but high-tech assembly plants and back-office employers promise middle-class wages for locals and transplants alike.
These stirrings have shaken Reading’s housing market out of the doldrums. With a huge supply glut and very low prices, it’s still a classic buyer’s market, but measurable price increases over the past couple years suggest that the market is ready to reward investment. If you’re keen on fixer-uppers, the city has a mind-boggling stock of beautiful if faded Victorian homes that can be refurbished and resold for (hopefully) a tidy profit. Pay special attention to Reading’s robust supply of foreclosures.
- Median Home Price: $155,500
- Selling Price Discount/Premium to List Price: -3.5%
- One-Year Change: 2.6%
- Three-Year Change: -1.9%
- Five-Year Change: -10.0%
- Average Time on Market: 136
- Days of Supply: 331
- Foreclosures per 10,000 Homes: 11.6
- Local Unemployment Rate: 10.7%
4. Asheville, North Carolina
While Asheville gets more press for its stunning setting at the foot of the Appalachian Mountains than for its housing market, the two really go hand-in-hand. Located two hours west of Charlotte, Asheville serves as the economic nerve center of southern Appalachia and boasts an eclectic bohemian vibe that speaks to students and free spirits alike. Tourism, naturally, is a major industry as well.
Of course, it’s not all fun and games here: Asheville has a booming technology industry and is an emerging culinary hub. And after years of stagnation, its real estate market is finally starting to fall in line, as prices have risen by 3% over the past year, and the local foreclosure rate has reached pre-recession levels.
However, the standout feature of Asheville’s housing market is the hefty gap between asking prices and sale prices. This suggests that prices may not rise by much in the near term, giving patient buyers more time to find the perfect place. And when you do finally locate a house here, you can count on having some serious negotiating power.
- Median Home Price: $185,600
- Selling Price Discount/Premium to List Price: -10.8%
- One-Year Change: +3.5%
- Three-Year Change: +4.3%
- Five-Year Change: -1.3%
- Average Time on Market: 130 days
- Days of Supply: 164 days
- Foreclosures per 10,000 Homes: 2.5
- Local Unemployment Rate: 5.7%
5. Rockford, Illinois
Rockford is located less than 100 miles from downtown Chicago, but it bears little resemblance to the Windy City. Like many medium-sized cities across the industrial Midwest, Rockford has historically relied on massive assemblies and logistical installations to drive its economy. Needless to say, the past two decades haven’t been kind to these major employers, and many have reduced their local footprints or moved on altogether. A handful of automotive and aerospace companies remain, but Rockford’s leaders are beginning to recognize that the city’s industrial glory days are gone for good.
Fortunately, Rockford is a growing hub for the insurance industry, and has had some success in attracting high-tech manufacturers. Two of the Midwest’s busiest interstates meet here, so the city is also a noteworthy trucking hub.
Of all the housing markets on this list, Rockford’s is probably the riskiest. Prices dropped sharply during the recent recession, and a related glut of foreclosures continues to keep the market depressed. This is good news for ambitious buyers who don’t mind waiting a few years to sell. Prices remained basically flat in recent times, so it stands to reason that the local market could turn the corner soon. In the meantime, buyers who get in at what might very well be the market’s rock bottom will have their pick of below-market-price foreclosures that require just a little TLC.
- Median Home Price: $95,200
- Selling Price Discount/Premium to List Price: +6.3%
- One-Year Change: -0.3%
- Three-Year Change: -14.2%
- Five-Year Change: -32.3%
- Average Time on Market: 123 days
- Days of Supply: 174 days
- Foreclosures per 10,000 Homes: 38.1
- Local Unemployment Rate: 12.6%
6. Tulsa, Oklahoma
Tulsa has a strong economy that shows no signs of slowing down. Dozens of energy firms maintain headquarters or branch offices here, so the city has benefited greatly from the ongoing shale gas boom. Tulsa’s location near one of the world’s largest energy terminals (at Cushing, Oklahoma) helps too. Meanwhile, the city is a jumping-off point for tourists looking to escape to the Ouachita Mountains – it’s directly across this highland region from Little Rock – or the lake district of northeastern Oklahoma and southwestern Missouri.
Compared to places like Reading and Rockford, Tulsa’s housing market looks positively exuberant. While opportunistic buyers might be wary of a market that has posted strong price increases during each of the past five years, Tulsa remains incredibly affordable by national standards. With few economic headwinds on the horizon, it stands to reason that the city’s upward price trend will continue for the foreseeable future – meaning that the party isn’t even close to being over.
- Median Home Price: $110,300
- Selling Price Discount/Premium to List Price: +1.8%
- One-Year Change: +3.2%
- Three-Year Change: +10.1%
- Five-Year Change: +11.6%
- Average Time on Market: 118 days
- Days of Supply: 118 days
- Foreclosures per 10,000 Homes: 2.3
- Local Unemployment Rate: 4.9%
7. South Bend, Indiana
Even the most casual college sports fans can probably find South Bend on a map, and with good reason: The home of Notre Dame University lives and dies by the triumphs and tribulations of its young athletes. The pro sports teams in Chicago and Indianapolis, each barely 100 miles from South Bend’s doorstep, barely even register.
Of course, there’s more to South Bend than its college athletics program. Notre Dame itself is a major employer, and the city remains a major industrial hub. It’s just not what it used to be. Since the middle of the 20th century, many major employers – including automotive giants such as Hummer and Studebaker – have packed up and left. Generally speaking, the facilities that remain open are smaller and less labor-intensive than the ones that have been shuttered.
Unlike nearby Elkhart, the self-proclaimed “RV Capital of the World” – which had the nation’s highest unemployment rate until quite recently – South Bend’s economy isn’t completely beholden to a struggling segment of industry. As such, its housing market is stable. For buyers, the biggest opportunity here is a still-massive glut of foreclosures remaining from the housing crisis. Until these foreclosures are processed and sold (which could take years), buyers who don’t mind tackling DIY projects will have their pick of below-market homes.
- Median Home Price: $96,500
- Selling Price Discount/Premium to List Price: +2.2%
- One-Year Change: +1.2%
- Three-Year Change: -3.1%
- Five-Year Change: -15.5%
- Average Time on Market: Not available
- Days of Supply: Not available
- Foreclosures per 10,000 Homes: 32.5
- Local Unemployment Rate: 10.7%
8. Spokane, Washington
It might be a stretch to call Spokane “the South Bend of the Northwest,” but the two cities share superficial similarities. Spokane is also home to a large, well-regarded Catholic university (Gonzaga University) that excels in college sports. It’s also a regional capital that’s outshone by a nearby metropolis (South Bend has Chicago; Spokane has Seattle). And, not surprisingly, it’s far more affordable than its larger cousin.
However, the parallels aren’t exact. Spokane is a bit bigger than South Bend, and it’s blessed with a seemingly endless expanse of forested mountains to its north and east. Although it’s not known for a particularly dynamic economy, it has a stable, growing base of healthcare companies, universities, and high-tech manufacturers that invest heavily in its community. Its urban corridor extends well into neighboring Idaho, along Interstate 90, and the two states enjoy a reciprocal relationship: Washington doesn’t tax personal income, and Idaho has a famously lenient corporate tax, so many workers live in the former state and commute to well-paying jobs in the latter.
Relative to other Northwestern cities, Spokane’s median home prices are quite affordable, and buyers can expect to pay substantial discounts to list price. Home values are appreciating steadily as well. An impressive but not overwhelming supply of foreclosures may interest intrepid real estate investors.
- Median Home Price: $154,100
- Selling Price Discount/Premium to List Price: -3.6%
- One-Year Change: +1.9%
- Three-Year Change: -2.6%
- Five-Year Change: -9.9%
- Average Time on Market: 112 days
- Days of Supply: 116 days
- Foreclosures per 10,000 Homes: 8.6
- Local Unemployment Rate: 7.2%
9. Portland, Maine
Portland is the smallest and most expensive metro area on this list. Compared to neighboring markets in New Hampshire and Massachusetts, however, it looks downright cheap. In fact, Portland is gaining favor as a glorified exurb of Boston, attracting talented workers who’ve had it with the larger city’s high cost of living and stressful lifestyle. The city has a charming historic quarter, a beautiful waterfront, and a distinctive culture that’s heavy on the lobster and light on the pretensions. For outdoorsy transplants, Portland’s proximity to northern New England’s rocky coastline and towering inland mountains may well seal the deal.
Portland’s housing market is characterized by a persistent supply of foreclosures, which is great news for real estate investors. The city’s sale price discount is far and away the steepest on this list, adding an additional incentive. (It’s likely that the two factors are related, and buyers shouldn’t expect such a hefty discrepancy to persist forever.) With a low unemployment rate and a diverse economy that relies on tourism and commercial shipping, Portland is a great place to start a new life – and get a great deal on a house in the process.
- Median Home Price: $230,700
- Selling Price Discount/Premium to List Price: -20.5%
- One-Year Change: +1.2%
- Three-Year Change: +5.9%
- Five-Year Change: -5.5%
- Average Time on Market: Not available
- Days of Supply: Not available
- Foreclosures per 10,000 Homes: 10.1
- Local Unemployment Rate: 5.3%
10. Albuquerque, New Mexico
The jury is still out on whether “Breaking Bad” was a good thing for Albuquerque. On the one hand, it generated tremendous visibility for New Mexico’s largest city; on the other, it was about a ruthless drug dealer who turned the city into his personal playground. Regardless of where you stand, you’ll probably agree that Jesse, Walter White’s trusty sidekick, got a great deal on his mansion. Albuquerque offers a solid sale price discount and steadily but not spectacularly appreciating list prices. A high foreclosure rate sweetens the deal for buyers who want to fix and sell.
Outside of its southeastern oil patch, New Mexico’s rural economy continues to struggle. In Albuquerque, though, things are looking better than they have in a long time. The University of New Mexico and several major healthcare companies support a booming knowledge economy, and the city’s beautiful surroundings and unique culture make it an unheralded – but increasingly popular – tourist destination.
- Median Home Price: $181,000
- Selling Price Discount/Premium to List Price: -4.3%
- One-Year Change: +1.8%
- Three-Year Change: -3.2%
- Five-Year Change: -5.2%
- Average Time on Market: 112 days
- Days of Supply: 150 days
- Foreclosures per 10,000 Homes: 10.7
- Local Unemployment Rate: 6.3%
Of course, housing market affordability isn’t the only factor that should inform your next move. Good schools, vibrant culture, ample lifestyle amenities, and strong job prospects are all critical elements of any moving decision. While some of the cities on this list have a ways to go to recover the economic vitality they enjoyed during the pre-recession years, they offer impressive discounts on new arrivals’ most important investment: housing. Buyer’s markets don’t last forever, though, so be sure to investigate these 10 before they disappear.
Did you recently get a great deal on a home in one of these cities? What about places that weren’t mentioned here?