While the national housing market struggles with a median home price of $425,000 and mortgage rates hovering around 6.82%, several metro areas still offer relative affordability for potential buyers.
According to Realtor.com’s September Housing Market Report, Pittsburgh leads the pack with a median list price of $245,000, followed by Detroit at $277,000, Buffalo at $277,450, Rochester at $282,500 and St. Louis at $299,900. Those Northeast and Midwest markets represent savings compared to the national median.
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“For those feeling a little depressed about the state of the U.S. housing market, it’s not chaos everywhere,” Ralph McLaughlin, senior economist at Realtor.com, told CNBC. “There are isolated pockets of places that are still relatively affordable from a national perspective.”
An example is Rochester, which ranks 18th among September’s hottest housing markets. Despite a 13% year-over-year increase in list prices, the city’s median remains $143,000 below the national average.
“It’s purely an imbalance of supply and demand in action,” James Yockel, CEO of the Greater Rochester Association of Realtors, explained to Realtor. “We have seen a consistent foundation over the past twenty years.” New construction in Monroe County, where Rochester is located, has plummeted from about 1,600 building permits per year in the early 2000s to just 400 today.
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New York’s tax structure plays a role in maintaining relatively lower home prices. “Basically, a household has an amount of money that they can spend on housing within their budget,” says Yockel. “In New York, a higher percentage of that budget goes to taxes, which means they have to pay less for the actual house, which moderates price increases.”
The affordability of these markets partly results from historical economic trends. “These are all places where there has been a downward trend in job growth and population growth over the last 30, 40, 50 years,” McLaughlin told CNBC. “That tends to put downward pressure on prices, causing prices to fall outright or at least grow much more slowly than in the rest of the country.”
