5 Best Cities Where You Can Buy A House For Under $200K In 2024 – Forbes Advisor

Although interest rates on homes continue to climb, sale prices still show the market is red-hot. Currently, the median sales price of single-family homes in the U.S. is more than $412,000, according to the National Association of Realtors (NAR). In January 2023, it was $365,400.

With a hot housing market, it can be difficult to find a home on a reasonable budget. Here are some of the best cities where you can buy a house for under $200,000.

Where Can I Buy a Home Under $200K?

While coastal cities get all the attention, towns in Middle America are most affordable. The states with some of the most affordable areas to live include Texas, Indiana and Ohio. Here are some cities with homes that cost $200,000 or less.

1. Wichita Falls, Texas

According to NAR, the average home value in Wichita Falls, Texas is $176,400. Average prices are up from the year prior, but growth is slowing.

Compared to earnings, monthly mortgage payments in Wichita Falls are some of the most affordable in the nation, per NAR data. Residents pay less than 10% of their income toward mortgage payments compared to more than 23% nationally.

Although most residents report feeling safe, crime is higher in Wichita Falls than the rest of the country, according to data compiled by city and school analysis company Niche. Assaults, burglaries and theft (including motor vehicle theft) are all higher-than-average in Wichita Falls.

2. South Bend, Indiana

The current median home value in the South Bend, Indiana area is $183,000, according to NAR, making it one of the most affordable housing markets in the country. Prices are continuing to grow even as growth has slowed nationwide. Here, residents pay 8.8% of their income for monthly mortgage payments.

If you’re looking for a job in the area, employment is strong in South Bend, although unemployment is slightly higher compared to the rest of the country. Crime is much higher than the national average, with assaults and murders being more than four times the national average, according to Niche’s data.

3. Toledo, Ohio

You can currently buy a home for $156,000 in Toledo, according to NAR. Home prices are up compared to this time last year and even three years ago, but growth is slowing and in line with national trends.

Unemployment rates are higher in Toledo than the national average, but wages are high enough to make homes affordable. Only 7.8% of monthly income goes towards mortgage payments, according to NAR.

Even though most residents say they feel safe here, according to Niche’s data, crime is much higher in Toledo compared to the rest of the nation. Assaults and murder are almost four times the national average, and sexual assault, robbery, motor vehicle theft and burglary also trend above the national average.

4. Topeka, Kansas

Homes in Topeka, Kansas are averaging $176,100—growing more than 26% over the last three years but still selling for a fraction of the national average, according to NAR. Unemployment rates are lower than average in Topeka, but rates have risen since last year.

Topeka homeowners are paying 8.7% of their paychecks towards their mortgages, slightly more than this time last year but much lower than the national rate of 23%. Even though most residents feel safe here, crime is twice as high in Topeka as it is around the country, according to data from Niche.

5. Montgomery, Alabama

According to NAR, the median home price in Montgomery, Alabama is $185,400. This is up more than 27% over a three-year timespan, but prices dipped slightly from the previous quarter.

Montgomery’s unemployment rate is 2.1% and continues to improve, decreasing from 2.7% a year ago. More than 10% of residents’ paychecks are going towards mortgage payments in Montgomery, according to NAR’s data.

Most residents admit to feeling safe in Montgomery, but murder and burglary rates are more than double the national average. Assault, robbery and theft are also higher than average in Montgomery than around the country, according to data compiled by Niche.

How To Find a Home Under $200K

Finding a home to purchase under $200,000 can be challenging. If you’re looking on your own and have difficulty finding homes you’re interested in, consider these tips when you’re home shopping:

1. Look beyond your current location. If you feel like you’re drowning with your home or rent payments, explore places with more affordable costs of living. That might not be the neighborhood you’re in right now.
2. Look outside city limits. While some urban areas might have homes in your price range, you may have more luck looking in rural areas outside of a metro area.
3. Get some help. Enlist the help of a knowledgeable real estate agent who has helped buyers and sellers in the area you’re exploring. They’ll help you find a home within your budget and based on your preferences, and assist in negotiating a home price and walking you through closing.

7 Tips To Buy a House

Before you begin the purchase process for a home, take these steps:

1. Start saving. The sooner you start saving for a home, the more you can devote to your home-related expenses. That could be your down payment and closing costs or upgrades you’ll need to make after you purchase a home.
2. Clean up your credit. The higher your credit score, the more likely you are to qualify for the loan with the lowest interest rate offered. Try to pay off any outstanding debt and remove any bad marks off your report.
3. Determine your budget. Before beginning your search for a home, set your budget. By setting parameters, you’re ensuring you aren’t buying a home you’ll struggle to afford.
4. Get prequalified. See what your lending options are by prequalifying for a mortgage. The prequalification process shows you how much you may be able to borrow and what types of home loans you’d be eligible for, such as conventional, FHA, USDA or VA. A prequalification calculator can help you get started.
5. Compare lenders. The more lenders you compare, the more likely you are to find the best offer for you. Consider lenders offering the lowest interest rate, fewest fees and repayment terms that fit your budget.
6. Prepare your paperwork. Once you’ve found a lender, you’ll need a few years of financial history documents, including tax returns, pay stubs, bank statements and more. The more you have ready, the faster you can get your preapproval.
7. Get a preapproval. A preapproval letter isn’t required to buy a home, but it can help get you to closing faster. A preapproval letter shows sellers you’re serious about buying a home.