Across the country, the supply of properties for sale continues to lag behind still-high demand, driving up prices to new heights. Unfortunately, this means that many would-be homebuyers are now forced to seek homes outside of their desired area or even state to find homes within their price range.
According to the National Association of Realtors, the median price of an existing home has climbed year over year for 119 straight months (almost 10 years) through January 2023. During the same time period, total housing inventory fell 16.5 percent.
And as more people become less devoted to their existing location (thanks in large part to the increase in work-from-home options during Covid-19), many are opting to leave pricey states in search of residences that won't break the bank.
According to a recent Redfin research, roughly one out of every three buyers on their website in January were looking for a home in a different metro area than where they were currently located. In this study, BHGRE HomeCity examined property prices in all 50 US states to determine the top ten cheapest states to buy a home in 2023.
1. Oklahoma
Oklahoma is more than just one of the most affordable states to buy a home. It's difficult to beat Oklahoma Metropolitan and Tulsa for barbecue food and mid-sized city living. If you can live with drastic seasonal fluctuations, then choosing to buy a home in Oklahoma may be your best decision. Furthermore, at 87.9, Oklahoma's cost of living index is significantly lower than the national average.
Oklahoma's average home price is $188,899, which is somewhat less than half the national average of $344,141. Oklahoma has a slightly larger median home size than Arkansas at 1,746 square feet. Oklahoma residents pay a 0.83 percent property tax rate, which amounts to around $1,568 in taxes per year based on the average house value. Homeownership in Oklahoma is 67.3 percent which is slightly higher than the national average.
* Average Home Price: $188,899
* Estimated Cost Over 30 Years: $238,921
* Average Monthly Mortgage: $1,231
* Cheapest County: Cimarron County ($67,399)
2. West Virginia
West Virginia, aptly titled the Mountain State, is located in the Appalachian Mountains. It's famous for its undulating hills, valleys, and mountains, as well as the outdoor activities that go with it.
True, West Virginia lacks the glitz, the high-profile companies, and the easy media attention that New York and California enjoy. But, during and after the pandemic, the state became more popular as more purchasers were drawn to the Mountain State's lower pricing and natural beauty. The Appalachian Mountains, as well as several lakes, rivers, and hiking paths, pass across the state which makes it an ideal state for people that love the outdoor life.
Homes in West Virginia are identical to those in Mississippi. The typical cost to buy a home is slightly under $191,011 and requires 11.31 percent of the median household income to purchase.
* Average Home Price: $191,011
* Estimated Cost Over 30 Years: $224,528
* Average Monthly Mortgage: $1,023
* Cheapest County: McDowell County ($41,262)
3. Iowa
Tired of city life and looking to relocate to the peaceful heart of America? Iowa provides a change of pace, with rolling green hills and lots of room to lay your roots. Des Moines and Cedar Rapids strike a balance between city and country life.
Iowa has the third-lowest average home value in the country, at $201,306. A typical house has 1,550 square feet of living space. With a 1.43 percent property tax rate, homeowners can expect to pay $2,871 in property taxes per year. Nonetheless, homeownership rates in the state are among the highest in the US, with 75.6 percent of residents owning their homes.
This Midwestern state is the largest corn producer in the country, as seen by its miles of farmland. There are, however, many large cities in which to buy a home. Des Moines, Iowa City, and Cedar Rapids are the main housing markets in Iowa.
* Average Home Price: $201,306
* Estimated Cost Over 30 Years: $290,468
* Average Monthly Mortgage: $1,234
* Cheapest County: Pocahontas County ($88,991)
4. Kentucky
Kentucky, long known for tobacco and textiles, has grown as a significant manufacturing center. One of the nation's major cargo airport terminals is located in Louisville, the state's largest city, and home to Fortune 500 business Humana, a health insurance provider.
Kentucky is the fourth-cheapest state on our list to buy a home, with an average home valued at $202,108. In Kentucky, the average home has 1,750 square feet of living space. Kentucky's state property tax rate is 0.78 percent, implying that a typical homeowner would pay around $1,576 in state property taxes yearly. And thanks to the low price of homes in the state, Kentucky boasts of a 68.5 percent homeownership rate.
Also known as the Bluegrass State, the biggest cities in the state are Louisville, Lexington, and Frankfort.
* Average Home Price: $202,108
* Estimated Cost Over 30 Years: $252,203
* Average Monthly Mortgage: $1,158
* Cheapest County: Knott County ($63,436)
5. Arkansas
Arkansas is well-known for its many lakes, as well as its hot springs and rivers. The state is also known as "The Land of Opportunity" since it produces the most poultry in the country.
Arkansas has the fifth-lowest average home price in the country, at $204,451. Homebuyers can anticipate 1,792 square feet of living area on average. With a homeownership rate of 66.5 percent, the state is slightly higher than the national average. Arkansas has the tenth-lowest state property tax rate in the country, at 0.61 percent, resulting in annual state property taxes of just $1,247 for a house priced at the average home value.
If you enjoy peace and quiet, this state may be a place to buy your next home. The entire state has fewer people than the city of Miami.
* Average Home Price: $204,451
* Estimated Cost Over 30 Years: $246,089
* Average Monthly Mortgage: $1,071
* Cheapest County: Monroe County ($80,526)
6. Ohio
Ohio may not be the first place that springs to mind when considering a move, but there is more to it than meets the eye. Ohio has quaint communities, booming cities, and outdoor activities to suit everyone's tastes.
If you like football, there are no bigger fans than those in Ohio— you simply have to decide between the Cincinnati Bengals and the Cleveland Browns before moving there. Ohio's cost of living index is 91.3, which is much lower than the national average.
The average price to buy a home in Ohio is worth a little over $200,000. Homeowners may expect to obtain 1,620 square feet of living area for $199,959. Ohio's state property taxes are much higher than the other states on this list, at 1.52 percent. Each year, the average homeowner can expect to spend around $3,154 in state property taxes which is far higher than the national average.
In Ohio, 67 percent of people own a home due to the low price of homes. Ohio is one of the most underappreciated states in the country in terms of affordable housing. Even in the heart of Cleveland, you may be able to buy a property for under $90,000.
* Average Home Price: $207,480
* Estimated Cost Over 30 Years: $306,314
* Average Monthly Mortgage: $1,269
* Cheapest County: Crawford County ($108,242)
7. Michigan
Michigan has nearly 10 million citizens and is the tenth most populous state in the United States. Manufacturing, natural resources, defense, and information technology underpin the state's varied economy. The state capital is Lansing, known for its affordable living combined with a stronger than average job market.
In Michigan, the median-priced home costs only 11.73 percent of the average household income of $75,300. The state's home price is $209,783. The state is most known for the Great Lakes and its auto manufacturing, which is centered in Detroit.
* Average Home Price: $209,783
* Estimated Cost Over 30 Years: $297,942
* Average Monthly Mortgage: $1,279
* Cheapest County: Gogebic County ($88,399)
8. Alabama
Alabama is the place to go if you're looking for an authentic Southern experience. You'll feel at home in large cities like Montgomery, Birmingham, or Mobile, which are known for their football, southern hospitality, and sprawling plantation mansions with curb appeal.
According to our rankings, Alabama is the eighth-cheapest state to buy a home. The typical home value in Alabama is $216,931 and the average home size in Alabama is 1,800 square feet, which is consistent with the national average.
Alabama has the lowest state property tax rate in the US, at 0.37 percent. Because of its low property tax rate, homeowners pay just around $803 in state property taxes per year. The state has a 71.5 percent homeownership rate which is a result of its low property tax rate and home price.
* Average Home Price: $216,931
* Estimated Cost Over 30 Years: $244,721
* Average Monthly Mortgage: $1,147
* Cheapest County: Perry County ($78,450)
9. Louisiana
With about 4.7 million people, Louisiana is the 25th most populous state in the United States. Agriculture, transportation, and tourism are three of Louisiana's most important business sectors. The state capital is Baton Rouge, and the largest metro area is New Orleans.
The average price to buy a home in Louisiana is $223,253. For this amount, a homeowner can expect an average of 1,786 square feet of living space. The average homeowner may anticipate paying around $1,139 in real estate property taxes each year at a 0.51 percent rate. Due to Louisiana's low home price, its homeownership rate is pretty high with 69.7 percent of its populace owning a home
As a "cultural melting pot," The Creole State has fantastic art galleries, gastronomy, wonderful architecture, affordable housing, and attractive locations to live.
* Average Home Price: $223,253
* Estimated Cost Over 30 Years: $261,122
* Average Monthly Mortgage: $1,267
* Cheapest County: Tensas Parish ($75,110)
10. Nebraska
Nebraska is the 37th largest state in the United States, with a population of about two million people. Agriculture, transportation, manufacturing, and information technology are all important economic drivers in the state. Lincoln is the state capital and is regarded as a part of the "silicon prairie" because of the growing number of tech startups that call it home.
A mortgage payment for a median-priced property in Nebraska will cost only 11.19 percent of a person's income, or $740.22. The state's price to buy a home is around $227,363, which is quite affordable compared to the national average home price. In terms of affordability, Nebraska was ranked sixth in the country by US News & World Report in 2019. And the state is currently ranked 13th in terms of cost of living, and 4th in terms of cost of housing.
* Home Price: $227,363
* Estimated Cost Over 30 Years: $335,186
* Average Monthly Mortgage: $1,352
* Cheapest County: Grant County ($69,527)
The Full List
As a home buyer looking to buy a home amidst the growing home prices, it is important that you find properties in states where your dollar will go the furthest. To help you do that, we decided to compile a list of the cheapest states to buy a house in America in 2023. Below are the cheapest state to buy a house in particular order:
1. Oklahoma
2. West Virginia
3. Iowa
4. Kentucky
5. Arkansas
6. Ohio
7. Michigan
8. Alabama
9. Louisiana
10. Nebraska
11. South Dakota
12. Indiana
13. Wisconsin
14. North Dakota
15. Missouri
16. Pennsylvania
17. Mississippi
18. Tennessee
19. Illinois
20. Kansas
21. Georgia
22. Minnesota
23. South Carolina
24. Texas
25. North Carolina
26. Vermont
27. New Mexico
28. Delaware
29. Maine
30. Alaska
31. New Hampshire
32. Wyoming
33. Florida
34. Virginia
35. Maryland
36. Montana
37. Arizona
38. Rhode Island
39. Connecticut
40. Idaho
41. Nevada
42. New Jersey
43. Oregon
44. Utah
45. Colorado
46. New York
47. Washington
48. Massasuchetts
49. Hawaii
50. California
Note: The above data is on a state level and will naturally vary by market within each state.
Ready to buy a house?
Buying a house within your budget and in an affordable location is critical for long-term success as a homeowner. While Texas ranks number 23 on the list, it’s still the middle of the road in terms of affordability and home to many desirable cities and counties.
No matter what state you choose, you should look into the best areas based on characteristics such as educational systems, crime rates, and average property worth. This will assist you in narrowing down your list of potential areas to investigate when looking to buy a new house.
Contact us today to find your perfect home in Texas.
Methodology
To come up with a list of the top 10 cheapest states to buy a house, we started by gathering the average home price in each state. Since some states may have lower property prices, but the tax on them may be high, resulting in a higher cost to be paid by the buyer.
Thus, we calculated the (estimated) annual property tax for each state that a home buyer will have to pay over the course of their mortgage. For ease of comparison, we used the longest mortgage period (30 years) since it also incurs the lowest monthly mortgage price for homebuyers.
Another factor worth including is the closing cost and transfer tax. Since both prices differ from state to state, we created a list of average closing costs, and transfer tax for each state.
After collecting these data points for all the states, we calculated their sum for each state and ranked the states based on the total cost incurred by a homebuyer over 30 years. Since property tax is liable to change as time passes, the calculations are estimates based on current values for property tax, home price, closing cost, and transfer tax in each state.
