These Are the 10 Most Affordable Markets To Invest in During 2024

In this article

The U.S. housing market is facing an affordability crisis. The combination of high home prices, high mortgage rates, and decreased spending power has driven housing affordability to its lowest level in decades. As such, it is difficult for investors and homebuyers alike to identify cities where they can afford to buy property. 

But, there are still great opportunities to buy real estate, even on a budget. I’ve done the research and have identified the 10 most affordable markets for real estate investors. Below, I’ll explain how we arrived at the current situation, my criteria for selecting these markets, and then give you some data about the cities. Check out the list below and determine if any of these cities fit your investing goals.

How We Got Here 

At this point, everyone knows what’s happened to the housing market since the beginning of 2020: it went up a lot. Driven by strong demographic demand, remote work, ultra-low interest rates, and several other factors, the housing market went on an incredible run of appreciation from the beginning of 2020 to the middle of 2022.

Since the summer of 2022, prices have started to come down as mortgage rates have risen, but the appreciation we’ve seen is still staggering. From December 2019 to December 2022, prices grew 31% on a national level. In certain markets, prices have gone up even further. Austin, Texas, for example, went up 43% in that timeframe, despite seeing price drops over the second half of 2022. 

The reason prices started to drop in the middle of 2022 is because affordability eroded. Despite rapidly rising prices, affordability in the housing market was still strong for years due to low mortgage rates. But of course, when rates started to rise, reality started to set in. The combination of high rates and super-high home prices eroded affordability to the lowest point in decades. Below you can see how dramatically the U.S. Fixed Housing Affordability Index declined.

Of course, the story of how we got here and the data I’ve shown is on a national level. In reality, the housing market is very regional, and there are still relatively affordable places to buy real estate in 2024.

Methodology

I selected four criteria to help investors understand where they can make affordable investments with good long-term return potential. The city had to meet my definition of affordability and pass some basic tests of “investability.” 

1. The city has to have a median home price lower than the median home price for the U.S. as a whole. All of the markets on this list are well below, as the median sales price nationally is about $400,000 as of writing.  
2. The city had to be large enough to have good economic prospects and reliable data. I drew from a pool of the 125 largest metros in the U.S. 
3. The city has to have grown in population from 2022 to 2023, according to the U.S. Census. While there are many macroeconomic variables you want to look at when selecting a market, population growth is perhaps the most important. The one exception on this list is Buffalo, New York since the price is so much more affordable than the other markets here. 
4. The city has to have a rent-to-price ratio (RTP) above .45%. RTP is a good proxy for cash flow, and you’ll likely want to find a deal with an RTP of .75% or higher. However, these days, cash flow is hard to find, so I had to lower my standards to even make a list. With that in mind, in these markets, you’ll be able to find cash flow somewhere. You’ll just need to do your own research.

Together, this is a list of major metro areas that have home prices below the national average, are growing in population, and have a decent opportunity for cash flow. Of course, I could consider many other criteria to select these markets, but this list is simple, easy to understand, and provides good direction. If you are seriously considering investing in any of these markets, you should do far more due diligence and understand the market much deeper than this analysis allows.

The Markets 

Below you’ll find a list of the 10 most affordable markets for real estate investors for 2024. Notice that while all of these markets have median home prices below the national average, there is a big difference in price point even on this list. For example, the cheapest market, Buffalo, has a median home price of about $188,000, which is nearly $100,000 cheaper than the most expensive market on this list: Lincoln, Nebraska.

Market	Median Sales Price	Rent-to-Price Ratio	Population Growth YoY
Lubbock, Texas	$235,000	0.63%	0.91%
Greensboro, North Carolina	$250,000	0.55%	0.64%
Tulsa, Oklahoma	$219,000	0.56%	0.83%
Buffalo, New York	$188,000	0.53%	-0.43%
Oklahoma City, Oklahoma	$253,000	0.55%	1.09%
Indianapolis, Indiana	$225,000	0.53%	0.62%
Cincinnati, Ohio	$254,000	0.48%	0.23%
San Antonio, Texas	$256,170	0.56%	1.94%
Des Moines, Iowa	$204,500	0.47%	1.19%
Lincoln, Nebraska	$272,000	0.45%	0.42%

Final Thoughts

Again, if you’re considering investing in any of these markets, you need to do a lot more due diligence. You should learn more about the economic situation, regulatory climate, and demographics of the area, just to name a few key topics. You also need to find a good deal! Within each of these cities, there will be deals with great returns and deals with bad returns. It’s your job to find the good ones.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.