Skyrocketing prices and record-low inventory have made buying a house impossible for many Americans but for those who are willing to relocate, a new study from Rocket Mortgage ranking the cheapest states to buy a home may offer some homebuyers hope.
While several studies have been done with varying results due to different contributing factors of income and cost of living data, The study by Rocket Mortgage analyzed data measuring the 2021 movement of single-family house prices, the change in home prices in Q4 of last year from Q3; the cost of living index which is the amount of money needed for a comfortable lifestyle, with “100” marked as the U.S. national average; the house price index per state which is single-family home transactions with conventional and conforming mortgages in Q4 of 2021; and lastly, the median household income in all 50 states.
Topping the list as the cheapest state to buy a home in 2022 is Tennessee. The cost of living index is at 89 with a median household income of $68,600. Lack of income tax and low property taxes also make it a favorable state to live.
The second cheapest state to buy a home is Illinois. The cost of living is lower than the national average with an index of 94.3 and median household income of $85,000. Rounding out the rest of the top five is Oklahoma, Ohio and Texas.
While most would consider states like New York, California or Hawaii to be the most expensive states to buy a house, only Hawaii even made it in the top 5 of most expensive. Topping the list as the most expensive state to buy a home is Oregon. The rest of the top five are New Mexico, Alaska, Utah and then Hawaii in fifth.
When it comes to buying in this hot market, there are some money-saving moves besides moving to a cheaper state. Mortgage companies suggest favoring a better neighborhood over the house itself when possible. The property will hold more value over time when things slow down. A smaller house in a choice neighborhood could mean long term savings because it will usually come with less taxes, utility costs and upkeep. Buying a cheap house that you can fix up over time could also raise the value of the home.
North Carolina just missed the top 10 of cheapest states to buy a home coming in at number 11.
To see the full list of the report click here