May 19 2023

Can’t afford a house? Move to the suburbs.

Image
homebuyers
homebuyers

The suburbs are likely to be the most affordable place for today’s homebuyers, a new study shows.

Homebuying affordability has taken a hit. But for homebuyers feeling the squeeze, there are still solutions. More than three-quarters of suburbs surrounding high-cost cities have affordable home prices.*

Cheaper suburbs offer hope near pricey markets

homebuyers

According to a recent Point2Homes study:*

  • Median home prices in the top 20 largest, costliest cities in the U.S. are too high for most of today’s homebuyers. These include New York City, San Francisco, Los Angeles, Boston, and others.
  • But over 75 percent of the surrounding suburbs within 30 miles have homes with a much lower price per square foot. Prices may be up to 65 percent lower in some areas.
  • The most affordable suburbs are on the East Coast, near cities like New York, Boston, and D.C. “In Salt Lake City, 100 percent of suburbs within 30 miles are more affordable,” the study notes.

In short, if you have your heart set on living in Boston or LA, you might not have to give up your dream. You’ll just need to adjust expectations. While Boston homes may have a median price of $641 per square foot, homebuyers who purchase in the suburb of Lawrence, Massachusetts, where homes cost $387 less per square foot, could see up to 60 percent savings.

Which expensive cities have the most affordable suburbs? Here are the top five:

  1. Salt Lake City, UT
  2. New York, NY
  3. Washington, D.C.
  4. Boston, MA
  5. Honolulu, HI

Most of the cities with the fewest affordable suburbs are in California. But in many areas, a homebuyer is likely to find a house that’s bigger or cheaper if they’re willing to search within 30 miles of the city center.

Along with lower housing prices, you might be attracted to the suburbs if you’d like to enjoy a lower cost of living and have more indoor and outdoor space. Compared to the city, suburban homes usually have more square footage.

Remote work is also making suburban living possible. Bank of America’s recent survey of more than 1,000 millennials found that roughly 45 percent of millennial homebuyers anticipate buying a house in the suburbs.

There’s a home out there with your name on it.

Contact your local Academy Loan Officer.

Today’s housing market isn’t national—it’s local

If you have concerns about higher home prices, it may comfort you to keep this in mind. As Ali Wolf, Chief Economist of Zonda, points out, “There is no national housing market.”

By this, Wolf means that every area is unique. Each city—and suburb—may be experiencing different market conditions. One locale may have higher prices driven up by demand, while prices may remain low, or even decline slightly, in another.

“In the [early] pandemic, it didn’t really matter where you were. The housing market was thriving and growing. Since interest rates have risen and inflation is higher and economic uncertainty abounds, we’re reverting back to very localized housing markets,” Wolf says.

While some headlines suggest that nationwide home prices are plummeting, this isn’t the case.

Year-over-year data shows that national housing prices are still appreciating, just at a slower rate.** But the real action is happening at the local level. Low inventory in some cities may be contributing to price gains.

Low inventory may also spur local competition. The housing market is technically less active than what is typical for this time of year, but homebuyers are moving quickly on limited listings. The amount of competition you face will depend on buyer activity in your local market.***

For now, affordability is what matters to homebuyers who want to find a house in their price range. While it may not be possible for many homebuyers to purchase in some of the pricier metros, this doesn’t make homeownership impossible.

Expanding your search radius appears to be the most effective way to turn up more affordable listings.

We create life-changing experiences through lending.

Find your local Academy Loan Officer and start your experience.

Please consult a trusted professional as personal circumstances may vary. No specific results are guaranteed. Not all applicants will qualify. MAC524-1486874.