More Americans are renting homes than ever before, and with increasing demand comes higher prices across the board. Between 2006 and 2014, the number of renters in the U.S. grew to over 43%, and with mortgage rates continuing to rise, a growing number of would-be homebuyers will inevitably find themselves unable to make the move.
But it's not just mortgage rates that are stopping younger Americans from buying homes. In fact, despite the recent string of interest rates hikes, the cost of getting a home loan is still relatively low. Rather, much of the problem boils down to lack of inventory. Trulia reports that between 2012 and 2016, the number of starter homes on the market dropped by 44%, while the number of mid-range homes fell by 41%. The only category that did increase was pricier homes -- those far out of reach for the typical worker.
Given the limited supply of affordable homes available for purchase, prices have been going nowhere but up, leaving renters no choice but to continue paying a premium. That said, there are still a number of cities where housing costs haven't jumped too significantly. SmartAsset recently compiled a list of the most affordable cities in the country. If you're looking to get more for your money and keep your housing costs to a minimum, here are six to explore.
1. Buffalo, NY
Despite the fact that New York has the highest state income taxes in the country, Buffalo is among the cheapest places to live thanks to its relatively low housing costs. The median monthly rent in Buffalo is just $512 -- less than half the average cost of rent for a New York City apartment. In fact, not so long ago, Forbes magazine ranked Buffalo as the third most affordable city in the country, and not just because of its housing prices. Groceries and utilities in Buffalo are more than 7% less expensive than the national average, while healthcare is almost 12% lower than the national average. When you factor in the city's growing job market, it pays to add it to your list -- provided you can handle the snow, of course.
2. Springfield, MO
With moderate income taxes and relatively low property taxes, Springfield is attracting a growing number of Americans who'd rather not spend a fortune on housing. The median monthly rent in Springfield is just $525, while the median monthly home payment is only $905 a month -- the lowest of any major U.S. city. All told, the cost of living in Springfield is 10.1% below the national average, and job seekers have a host of opportunities to explore in and around the city. Springfield boasts two major health networks that employ over 30,000 people, while professional and business services in the region have grown 16% over the past five years.
3. Fort Wayne, IN
The cost of living in Fort Wayne is 5% lower than Indiana's average, and 16% lower than the national average. But what's more impressive is that housing costs in Fort Wayne are a whopping 39% below the national average, and with a median monthly rent of $535, it's easy to see why. These low housing costs (due in part to relatively low property tax rates) allow residents to stretch their budgets despite the slightly higher-than-average income taxes imposed at the state level. Employment opportunities are also abundant in Fort Wayne. In fact, the city ranked 15th on WalletHub's recent review of the best cities for jobs.
4. Knoxville, Tennessee
Often hailed as one of America's best college towns, Knoxville is a draw for students and families alike. The median monthly rent in Knoxville is just $589, while property taxes are among the lowest in the nation (as are income taxes). Groceries and housing are also a relative bargain in Knoxville, coming in at 11.2% and 14.7% below the national average, respectively.
5. Jackson, MS
Those who move to Jackson can benefit from the city's more-than-reasonable housing costs. The median monthly rent in Jackson is just $576, which is about 40% below the national average. But it's not just housing that makes Jackson among the country's more affordable cities; everyday goods and services are also a lot cheaper. Case in point: A loaf of bread in Jackson will set you back just $1.55, compared to $2.70 in New York City. Best of all, you can find work in Jackson, too. The city ranked 100th on WalletHub's 2017's best cities for jobs.
6. Birmingham, AL
With a median home value of just $86,000, it's no wonder Birmingham makes the list. Thanks to Alabama's low property tax rate (the state ranks 49th out of 50), the median monthly rent in Birmingham is just $521. Overall, the cost of living in Birmingham is 15% lower than the national average, with general sales tax being 21% lower and state income tax being 10% lower.
Housing is the typical American's single greatest monthly expense, so it's critical to keep your costs as low as possible. If you're tired of spending a fortune on rent, it pays to explore these six cities and see if one of them is right for you.
The Motley Fool has a disclosure policy.