Our sister site, The Ascent, recently published data on the 10 best cities for a high salary and low cost of living. Their research, using data from the Council for Community and Economic Research's cost of living data for metropolitan areas in the United States, zeroed in on the places where the optimal combination of high salaries and low cost of living can be found.
While the Ascent's research focused on metropolitan areas, we narrowed it down to individual cities within those metros to get a snapshot of the housing market in each area. These cities vary greatly in size and in the number of available homes on the market.
As a benchmark, the median existing-home sold price in the United States in October 2019 was $270,900, up over 6% from $255,100 one year ago, according to the National Association of Realtors. In fact, October's price increase marked the 92nd straight month of year-over-year gains.
In compiling this list, we used data sourced from Realtor.com to measure median list prices for October 2019. In some markets, list prices and sold prices track similarly, but in other markets, they can vary greatly. One thing that's immediately apparent on this list is that prices aren't dropping by a large amount in any market.
|City||October 2019 median list price||Percent increase year over year||Current inventory|
|Des Moines, IA||$172,900||0.5%||1,354|
|St. Louis, MO||$179,900||6%||4,256|
The secret's out about Kalamazoo, the top city on The Ascent's list. While home prices are still well below the national average, Kalamazoo is starting to heat up. Not only have list prices risen 13% in the past year, but home values are on the rise as well. Zillow's market value data forecasts a 7% rise in home value in the area for the coming year.
List prices are also ticking upward in Huntsville and sales are keeping pace. A recent third-quarter analysis done by the University of Alabama in Huntsville for the Huntsville Area Association of Realtors showed that home sales in the area are at a peak for the decade. With the average time on the market around 38 days, this is a fast-moving market that is also experiencing below-average inventory.
Des Moines, Iowa
Good news for those considering Des Moines: Realtor.com just ranked it second on a list of cities where homes are getting more affordable. Prices have remained mostly steady, and according to the Des Moines Association of Realtors, sales in October were up by 0.8% from one year ago. A planned professional soccer stadium, which is part of a $95 million mixed-use development downtown, could contribute to ongoing growth in the area.
With list prices well below the median sales price, Champaign may be a hidden gem. Zillow data shows that homes in the Champaign-Urbana metro have seen values increase 2.1% over the past year and are predicted to rise 0.9% within the next year. The Champaign County Association of Realtors' October data report indicated that year-to-date home sales are down 6.89% from the previous year. Homes are on the market for an average of 85 days, giving potential buyers plenty of time to make a decision.
St. Louis, Missouri
One of the bigger areas on The Ascent's list, St. Louis has seen steady price gain in the past year. A recent FHFA report showed that prices have risen for 18 straight quarters and are up 40.5% since 2011. However, Zillow predicts that home values will increase just 0.3% for the coming year, a sign that St. Louis prices may be at or near a peak. One other potentially ominous sign, St. Louis was name-checked in the Wall Street Journal's recent article on Zillow's report on the potential glut of baby boomer homes coming in the next two decades. The city is already feeling the impact of older homeowners putting suburban houses up for sale.
Houston is the most massive metro on this list with over 16,000 homes for sale. Houston has seen prices rise dramatically over the past several years, but appreciation has slowed recently. The Houston Association of Realtors reported that Houston is on target for a record sales year in 2019, sales are already up 4.2% from last year's record volume. Inventory is up and the amount of price cuts has started to increase, indicating a market that is coming to terms with a new normal on pricing.
The Ascent named the entire Kennewick-Richland-Pasco metro in its top 10, and the Tri-Cities area has seen a major acceleration in home values. Zillow data shows that home values were up 11% in the past year and could rise by nearly 9% in the coming year. While prices are above the national average, they are still below other parts of Washington state, making this area desirable for value-seekers.
Raleigh, North Carolina
An expanding population has fueled price acceleration in the Raleigh-Durham area. Raleigh has seen a lot of investing in recent years, and the Urban Land Institute's Emerging Markets Trends in Real Estate report for 2020 ranked the Raleigh-Durham area second for overall real estate prospects, behind only Austin, TX. Home prices are higher than the national average and days on market are generally below two months. Increased homebuilding in surrounding areas could ease some of the crunch in the coming years.
Dayton is one of the most inexpensive markets on The Ascent's list, but investors and buyers are catching on to the opportunities in Ohio's lower-priced markets. The Dayton Association of Realtors data for October 2019 has sales up nearly 5% from one year ago and the residential median home price is up by 5.26%. With inventory at just a two-month supply, days on the market have started to drop. Zillow shows that home values in the area rose 8.5% in one year and are set to increase by nearly 4% in 2020.
The last city on the Ascent's list also had the lowest median list price. It's also the only area on the list where Zillow's home values data noted a decrease in value, albeit by a modest 1%. Peoria has suffered in the wake of Caterpillar's (NYSE: CAT) decision to move its headquarters out of the area, which prompted a rapid uptick in inventory. Peoria has a higher volume of foreclosures than much of the country, and Attom Data ranked it as the top spot for "zombie homes" (vacant foreclosures) in the third quarter of 2019.
Balancing price and opportunity
These cities represent the wide variability that can be seen in housing markets across the country. While the Southeast and Pacific Northwest are struggling with affordability concerns, much of the Midwest offers housing stock at below-median prices. In looking at markets for investing, it's always important to consider not just the current and historic home prices but also the larger economic factors that can dramatically change a city's fortunes.
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