Putting money down for a mortgage on a home is a great investment for many Americans. Sometimes, of course, the daunting up-front costs might deter potential buyers from taking the leap altogether, and that can leave them wondering where it’s possible to purchase a home with less cash up front. SmartAsset ran the numbers to take a closer look.
To find the states where it is most affordable to buy a home, we analyzed data from across the country and looked at the following metrics: effective property tax rate, median listing price, median listing price per square foot, median home value for the bottom one-third of homes and average closing costs. For details on our data sources and how we put all the information together to create our final rankings, see the Data and Methodology section below.
- Southern and Midwestern comforts. According to Census region and division delineations, seven of our top 10 states are in the South and three are in the Midwest. In the top 25, the South claims 11 states, and the Midwest claims 10. Of the four remaining states in the top 25, three are in the Mountain West – New Mexico, Wyoming and Arizona – and only one is in the Northeast – Pennsylvania.
- Three metrics stand out. All of the states in our top 10 crack the top third for affordability in the same three metrics. They are median listing price per square foot, median home value for the bottom one-third of home values and average closing costs.
1. West Virginia
The top state in this study, West Virginia, has a median listing price of $169,000. It has a median bottom-third value of $40,700, meaning that this is the median value for all homes in the bottom third of home values in the state. For both of these metrics, West Virginia has the top ranking in this study overall. The median listing price per square foot in West Virginia is $98.38, the second-cheapest price in this study. The effective property tax rate there is 0.57%.
Arkansas’ homes have the second-lowest median listing price in the entire study, $179,900. The state also has the third-lowest median listing price per square foot, at $101.19, and the fourth-lowest median value in the bottom third of home values in the state, at $55,000. The effective property tax rate in Arkansas is 0.61%.
Alabama ranks third, with the second-lowest effective tax rate in this study, 0.40%. The state has the fourth-lowest median listing price per square foot, $103.38, and the third-lowest median value in its bottom third of home values, $51,500. If you don’t end up staying in the state for the long haul, you might even consider renting out your property.
Another Southern state, Mississippi, takes fourth place in our list of top 10 cheapest states to buy a home. The median listing price per square foot in Mississippi is $95.75, the lowest in this study for this metric. Mississippi’s overall median listing price is a top-five rate, at $189,000. The effective property tax rate in the state is 0.78%. For context, the average effective property tax rate across all states we considered in our study is 1.11%.
Oklahoma’s median value for the bottom third of all home values in the state is just $49,500, the second-lowest figure in this study for this metric. Oklahoma also has the fifth-lowest average closing costs in this study, at $2,720. The effective property tax rate is 0.89% and ranks 23rd overall.
Average closing costs in Indiana come to $2,655, the lowest amount in the top 10 and the second-lowest overall. Indiana, which is also one of the best states for homeowners in 2019, has the sixth-lowest median listing price per square foot, $109.22, and the eighth-lowest overall median listing price, at $195,000. The Hoosier State’s effective property tax rate is 0.84%. By comparison, the average effective property tax rate across all states we considered in our study is 1.11%.
Kentucky comes in at seventh and has the fourth-lowest average closing costs in this study, $2,681. It also has the eighth-lowest median listing price per square foot, $118.96. The effective property tax rate in Kentucky is 0.85%. And if you’re planning for the long term and want to think about how property you buy there will factor into your estate, be sure to brush up on Kentucky’s inheritance laws.
Missouri ties with South Carolina for eighth place in our study. Average closing costs in the state come to $2,671, the third-lowest amount for this metric overall. The Show-Me State also has the sixth-lowest median listing price across all states we analyzed, at $193,000. The effective property tax rate is 0.95%.
8. South Carolina
South Carolina ties with Missouri for eighth place and has an effective property tax rate of just 0.55%, the fifth-lowest rate for this metric in this study. The Palmetto State also has the ninth-lowest median value for the bottom third of its home values, at $70,100. The median listing price is $250,000, the highest price for this metric in our top 10.
The final state on our list of the top 10 cheapest states to buy a home is Ohio. It has an effective property tax rate of 1.54%, the highest rate for this metric in our top 10 and the 37th-highest rate overall in this study. The Buckeye State does well for the metric of median listing price, however, with the third-lowest price in the study, at $180,000. Ohio also has a top-10 rate for median listing price per square foot, $110.90. If you’re sticking around Columbus, you’ll be glad to know that it’s one of the top 7 cities where investors are taking advantage of Airbnb.
Data and Methodology
To find the states where it is most affordable to buy a home, we analyzed data from 48 states, plus Washington, D.C. (Delaware and Louisiana were not included due to incomplete data). We considered the following metrics:
- Effective property tax rate. Data comes from the Census Bureau’s 2017 1-year American Community Survey.
- Median listing price. Data comes from Zillow and is for June 2019.
- Median listing price per square foot. Data comes from Zillow and is for June 2019.
- Median value of the bottom one-third of the market. This is the median value for all homes in the bottom third of home values in the state. Data comes from Zillow and is for June 2019.
- Average closing costs. Data is from SmartAsset’s closing costs calculator.
First, we ranked each state according to each metric. Then we found the average ranking for each state, weighting each metric equally. We gave the state with the highest average ranking a score of 100 and the state with the lowest a score of 0.
Tips on Buying a Home
- Expert advice. Thinking about buying a home? It might make sense to get some professional help. Finding the right financial advisor that fits your needs doesn’t have to be hard, though. SmartAsset’s free tool matches you with financial advisors in your area in 5 minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.
- Mortgage management. It’s important to know what you’ll be paying each month when you buy your home. Get a sense of what it might look like with SmartAsset’s free mortgage calculator.
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