- Iowa is the most budget-friendly state. The typical home price there is $227,500, which is 47% less than the average price across the nation.
- A large percentage, 81%, of Americans say saving for down payments and covering closing costs are big challenges to buying a home.
- Shifts in remote work have sped up people moving to states with lower costs of living, such as West Virginia and Oklahoma.
- Even though prices are low in some states, fewer job openings there could restrict how much your investment grows over time.
- Las Vegas is still a good middle-ground option. Prices are less than in coastal cities but appreciation is better than in very rural states.
If you have been having trouble finding a home you can afford, you are not the only one. In March of 2024, the typical home price nationwide reached a high of $428,000. This makes it hard for many people to get into the housing market. However, if you search in the right places, you can still find good deals. A recent study from Redfin shows the most budget-friendly states to purchase a house right now. Many of these states have typical home prices that are almost 50% lower than the national average. If you are buying your first home or an investor thinking about new markets, these are the places where affordability and opportunity meet.
Why Home Affordability Stays Difficult
Home prices have increased a lot in the last ten years. This is because of a few things, including not enough homes available, rising costs to build, and more demand during the pandemic. While home prices did decrease a little in late 2022 and 2023 because interest rates went up, affordability is still a major concern.
According to Bankrate, a large majority of Americans, 81%, say down payments and closing costs are major problems when trying to buy a home. These initial expenses often add up to tens of thousands of dollars. This creates a financial wall that is hard for many to get over. In fact, 76% of people asked said they think it will take them more than a year to save enough money for a down payment.
And yet, even with these money problems, the goal of owning a home is still alive. Realtor.com says that 75% of adults in the U.S. still see homeownership as a very important part of achieving the American Dream. This difference, between what people want and what is actually possible, explains why there is more interest in finding the most budget-friendly states to buy a house.
Redfin’s Top 5 Most Affordable States Right Now
To find out which states give buyers the best value, Redfin looked at home sales data from March 2024. The top states stood out because of their very low typical sale prices. Some were under $250,000. This makes these places attractive for buyers who have a limited budget.
Iowa – Typical Sale Price: $227,500
Iowa is ranked as the most affordable state for homebuyers in 2024. The typical sale price here is more than $200,000 less than the national average. Iowa is known for its flat land, rich farms, and towns focused on community. It is not just inexpensive, it is also stable.
Des Moines, Cedar Rapids, and Iowa City are some of the more developed city areas. They have hospitals, universities, and different kinds of jobs, especially in insurance, finance, and farming. Iowa has a good public school system and low crime rates. Because of this, it is often appealing to families and people who have retired.
It’s important to note that Iowa has a cost of living that is lower than average and reasonable property taxes. These things make owning a home for a long time more possible. For people buying their first home and investors watching their budgets, it is a beneficial situation.
Ohio – Typical Sale Price: $231,400 | Typical Monthly Payment: $1,472
Ohio often gets high rankings for affordability because of its cities in the rust belt and a changing economy. Areas such as Cleveland and Dayton have home prices that are historically low. At the same time, Columbus and Cincinnati are starting to show signs of price increases because of growth in tech and healthcare.
With a typical monthly mortgage payment of just $1,472, Ohio is one of the most affordable states. This is true not just for the price of homes but also for the ongoing cost of owning a home. When you add in job markets that are changing and universities that bring both new ideas and a stable population, Ohio is a very balanced affordable housing market in the nation.
For people who invest in real estate, rental properties in Ohio can give good cash returns, especially in areas where there is still high demand for housing but prices are still lower than average.
Oklahoma – Typical Sale Price: $236,700
If you want to find affordable homes in a state that also gives economic and lifestyle benefits, Oklahoma is worth considering. Property taxes are some of the lowest in the U.S. Also, people who have retired do not have to pay state tax on Social Security income.
Cities such as Tulsa and Oklahoma City have downtown areas that are being improved. There are better job chances and better transportation, all making the state a better place to live and invest in.
It is also important that Oklahoma has a low cost of living. Groceries, healthcare, and utilities all cost less than the national average. Plus, there is a good amount of building happening. Buyers can probably find good deals on both new and existing homes.
West Virginia – Typical Sale Price: $243,100
Located in the Appalachian region, West Virginia offers a way of life surrounded by nature. There are rolling hills, state parks, and quiet towns. This natural appeal means savings. Homes here are priced almost 43% lower than the typical price nationwide.
Charleston is the most city-like area in the state, but even in the capital, real estate is still very budget-friendly. What is more, West Virginia’s cost of living is among the lowest in the country. This makes it more attractive to people who have retired, those who work remotely, and anyone wanting a more relaxed life.
One possible negative is that job opportunities might be more limited than in other states, especially in areas that depend on mining. Still, it is a strong choice for buyers who value peace, simplicity, and savings.
Michigan – Typical Sale Price: $248,000
Michigan is number five on the list with a typical home price under $250,000 and an economy that is getting better. Cities such as Detroit and Flint were once known for industry decline, but they are now recovering. They are bringing in both investors and new residents.
The housing market in Detroit, in particular, has a range of options, from homes that need repair to modern apartments. This gives buyers a lot of choices in price and possible increase in value. Also, the state’s relatively high typical household income of $71,149 makes homes more affordable compared to income (Redfin).
Because it has access to the Great Lakes, lively college towns such as Ann Arbor, and a growing healthcare industry, Michigan is more than just a budget-friendly state. It is a state that is improving.
Honorable Mentions: Other Budget-Friendly States to Watch
Besides the top five most budget-friendly states to buy a house, some others are also worth noting for their affordability and possible growth
- Mississippi – Has the lowest property taxes in the country.
- Missouri – The markets in Kansas City and St. Louis are being improved.
- Louisiana – With budget-friendly homes and a rich culture, the suburbs of New Orleans offer overlooked value.
- Indiana – Secondary cities that are growing fast, such as Fort Wayne, have budget-friendly housing.
- Arkansas – Bentonville and Fayetteville are quietly becoming important economic centers, thanks to Walmart HQ and local universities.
These states all have typical home prices that are comfortably below $300,000. This makes them good choices for first-time buyers, people downsizing, and investors.
The Opposite Side: States With the Highest Home Prices
California is still the most expensive housing market. A typical sale price of $785,200 means owning a home is not possible for many. Other states with high costs include
- Hawaii – Often has prices over $850,000 because there is limited land and high demand from tourism.
- Washington – Tech jobs push typical home prices over $600,000.
- Massachusetts – Education and biotech industries cause prices to go up.
- Colorado – Beautiful scenery and people moving in to work remotely have pushed prices in Denver and Boulder close to $700,000.
These states may have higher incomes, but the relationship between home price and income is still difficult, especially for people buying their first home.
Comparing to Las Vegas: What Steve Hawks Sees Locally
Las Vegas is not in the top five most budget-friendly states to buy a house, but it offers much more value than some people might think. In 2024, Las Vegas still has typical home prices under $450,000. This is much less expensive than California but more than Iowa or Ohio. Still, Steve Hawks, a real estate agent with experience, points out that Vegas provides lasting value.
“While buyers are looking at more budget-friendly states, many forget that Vegas still has a lower cost to get in than most markets on the West Coast and continues to show good appreciation,” Hawks says.
With a growing tourism business, strong job increases, and constant improvements to infrastructure, Las Vegas is a good middle option. It is more affordable than top city areas and more active than very rural markets.
The Investment View: Buy Local or Go National?
States with low costs often bring in buyers who want to purchase affordable rental properties. But buyers should think about the benefits and costs before deciding to invest in properties far away.
Benefits of Buying in Affordable States
- Lower prices to buy mean less money at risk.
- Better cash returns in many rental markets.
- Lower taxes and costs to operate.
Drawbacks
- Demand for rentals might be lower in areas where fewer people are living.
- Possible for prices to go up might be slower or change more.
- Managing properties in another state can become costly if you do not have local help.
Las Vegas is in the middle. Homes are not the cheapest, but there are many renters, rent prices are increasing, and investors are still very interested. “It depends on how long you plan to invest and how much risk you are willing to take,” Hawks advises.
Analyzing Monthly Payments vs. Home Prices
Understanding affordability is not just about the price to buy, but also what you will owe each month. This includes your mortgage payment, taxes, insurance, and often HOA fees.
Take Ohio, for example. It has a low home price and a budget-friendly average monthly housing payment of $1,472. On the other hand, in California, the housing payment might be more than $4,000 for a similar home.
Your interest rate and type of loan also make a big difference. For example, using an FHA loan might make your down payment lower, to 3.5%, but increase monthly costs with mortgage insurance.
Tip: When you are thinking about the most budget-friendly states to buy a house, always calculate the total monthly cost, not just the purchase price.
Remote Work and Migration Trends
Remote work has greatly changed the real estate situation. Workers are no longer tied to long trips to work and expensive city living. Now, they think differently about home prices and quality of life.
Smaller states such as Iowa and West Virginia have seen more interest from homebuyers because of
- Lower costs of living
- Larger properties
- Better balance between work and personal life
Las Vegas has also attracted remote workers from California, Oregon, and Washington. If people continue to have flexibility about where they work, this will only increase the movement toward affordable homes in new areas.
What to Know Before Moving to a Low-Cost State
Moving to a place with cheaper housing is not always the best choice, especially if you ignore important things about quality of life. Think about
- Job Market: Can you find work locally or can you keep your income with remote work?
- Healthcare Access: Some rural areas have few hospitals or specialists.
- Schools: The quality of schools can change a lot between states and even cities.
- Weather & Infrastructure: Southern states might have strong storms. Infrastructure in states with low taxes might not be as good.
In short, just because it is affordable does not mean it is a good place to live. Do your research.
Expert Advice from Steve Hawks: Understanding Affordability as a Buyer
Steve Hawks, who has worked in real estate for a long time, says buyers need to think about where prices are heading, not just where they are now. “Will that budget-friendly home increase in value in the next 10 years? Can you rent it out if needed? What is your plan to sell it later?”
He also warns that buying in a very inexpensive market without knowing the local situation can be costly. Working with experienced local agents, whether in Las Vegas or another state, is important for making good choices.
Tips for Buyers on a Budget
If you want to buy a home that costs less than the national average, these tips can help you get there faster
- Automate Savings: Automatically send money each month to a special account for buying a home.
- Search for Assistance Programs: Many states have programs that give money to first-time buyers or people with lower incomes.
- Use FHA or VA Loans: These loans backed by the government can make your down payment smaller.
- Check Local Tax Benefits: Some cities and counties give benefits to homebuyers.
The Right Purchase Starts with the Right Market
Choosing a home, whether to live in or to invest in, starts with knowing where you can get the most value. Budget-friendly homes can be found across the Midwest and South. States such as Iowa and Ohio are leading the way. These most budget-friendly states to buy a house offer starting points that are much lower than the national average.
At the same time, buyers should not forget about middle-level markets such as Las Vegas. Here, growth potential, livability, and affordability come together. Home prices here are still lower than very expensive coastal areas. This offers a good value for serious buyers.
Are you looking for advice made just for you on whether to invest in Las Vegas or look into more budget-friendly states? Contact Steve Hawks for expert guidance without pressure that is made for your goals.