Americans are tightening their budget belts and that trend is spilling over into the U.S. residential real estate market, as buyers turn to more affordable locales that fit their financial needs.
That home spending shift is by necessity, as more Americans are in big-time budgeting mode in 2023.
DON'T MISS: Home Prices Heading Lower This Year
Consider the fact that 64% of U.S. adults are living paycheck to paycheck, according to a new study by Lending Club. That figure is up from 61% from one year earlier.
Plus, for the first time since Lending Tree rolled out its paycheck study, more than 50% of Americans with six-figure annual incomes say they’re “stretched too thin,” up from 42% over the same time period.
“The effects of inflation are eating into every American’s wallet and as the Fed’s efforts to curb inflation drive up the cost of debt, we are seeing near record numbers of Americans living paycheck to paycheck,” said Anuj Nayar, Lending Club’s financial health officer.
Maybe that’s why so many homebuyers are turning to more affordable locales to make an offer on a new house. Fortunately, those buyers are digging up new deals in out-of-the-way places, according to Realtor.com.
“Homebuyers are doing something about (high prices),” said Claire Trapasso on Realtor.com on April 26. “Frustrated by high home prices and rising mortgage interest rates, they’re increasingly seeking out more affordable places to live.”
Realtor.com took a closer look at the top “up-and-coming” U.S. real estate markets this spring and points to places like Lafayette, In. as a good example of a budget-friendlier landing spot for otherwise priced-out U.S. homebuyers.
“The Lafayette metropolitan area was named the top up-and-coming real estate market this spring according to the quarterly Wall Street Journal/Realtor.com® Emerging Housing Markets Index,” Trapasso noted. “The top 20 markets are generally smaller cities offering cheap homes for sale, low costs of living, and strong job markets. The index highlights real estate markets that economists believe will be strong this year.”
Other under-the-radar markets include Manchester, N.H., and Columbus, Oh., where prices are still reasonable and there are plenty of lifestyle amenities, good schools and parks, and lower crime relative to larger U.S. urban locales. Additionally, not one of the “top 20” emerging markets cited by Realtor.com are out west.
“We are continuing to see this shift in demand for less expensive markets, many of which are in Midwestern markets,” said Hannah Jones, an economic data analyst at Realtor.com. “They didn’t see the same kind of price growth that larger cities did during the [COVID-19] pandemic, so they maintained affordability.”
The top 20-list “are some of the only markets where locals and first-time buyers can afford to buy a home based on local salaries,” Jones added.
Here’s the full list of affordable U.S. home purchase markets as of spring, 2023, according to Realtor.com
Top 20 emerging real estate markets in Spring, 2023
- Lafayette, IN ($289,000 median home list price)
- Bloomington, IL ($339,000)
- Elkhart, IN ($275,000)
- Lebanon, PA ($372,000)
- Fort Wayne, IN ($339,000)
- Topeka, KS ($249,000)
- Sioux City, IA ($305,000)
- Omaha, NE ($345,000)
- Springfield, IL ($144,000)
- Manchester, NH ($550,000)
- Janesville, WI ($331,000)
- Columbus, OH ($375,000)
- La Crosse, WI ($334,000)
- Johnson City, TN ($413,00)
- Springfield, OH ($172,000)
- Hickory, NC ($349,000)
- Burlington, NC ($368,000)
- Columbia, MO ($367,000)
- Waterloo, IA ($263,000)
- Knoxville, TN ($470,000)
