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Top 10 Most Affordable States to Purchase a Home This Year

For people who are looking to buy a new home in 2016 or 2017, many housing markets across the US are still rising, but at a slower rate. This trend could make it a good time to buy in many markets, where prices are rising slower than in the recent past. With reasonably priced houses and the best interest rates for home loans seen in decades, the timing to become a homeowner could not be better. The Federal Government has also doubled down by expanding mortgage programs for new home buyers in the United States.

With housing markets, though, the location is always the key. The cost of buying a home varies widely depending upon the state. Let's take a look at the states where buying a home is the most affordable, as of September 2016:

#10 Indiana

Indiana has a very low median listing price of just $129,000, which makes buying a home here very affordable even with a modest income of only $48,000, which is the median for this state. This makes buying a home a better buy than renting, especially with cheaper property taxes than average.

#9 Florida

The Sunshine State has higher housing costs, but FL residents still can find an affordable home here, with a median listing price of $249,000. This is still true although home values have increased in the last year. This is a great sign for potential buyers who want to build equity in their new home.

#8 South Dakota

Homebuyers here can benefit from rising values, but the median listing price is only $192,000. Also, SD home values increased 13% over the last year. Homeowners on average gained $19,000 in equity.

#7 Iowa

Iowa has higher property taxes, but the median listing price is just $146,000. Even with those higher taxes, many residents find buying a home here better than renting.

#6 Kansas

Kansas benefits both from a low median listing price of $148,000, and a relatively high median income of nearly $55,000. Only 2.77 years of median income would buy an average home outright, making this a great place to live.

#5 Tennessee

Low cost housing in TN makes the dream of owning a home much more possible. This is especially true when you consider the cost of owning a home compared to renting one. Low property taxes and low mortgage rates also mean savings for many homebuyers in Tennessee.

#4 Missouri

Homebuyers in the Show Me state have an easier time saving for and affording a nice home, with the median listing price at only $139,900. The median household income also is over $56,000 and is a mere 2.5 times the median price of a home.

#3 Arkansas

Arkansas has one of the lowest median incomes in the US at only $45,000, but low housing prices here keep homeownership within reach for many citizens. Many people here also can benefit from very low property taxes and low mortgage rates under 4%. Low property taxes and a median home price of only $149,000 make this a great place to own a home.

#2 Colorado

This state has relatively high home prices, so you need to be careful of buying a home here and make sure it is affordable. However, CO is seeing major increases in home value, with over $27,000 being the average over 2015. There is a lot of potential to gain equity quickly here, as long as the market continues to rise. Property taxes are also very low.

#1 Maine

Maine has seen a spike in home values up $23,000 on average from 2015 so it is a good time for ME residents to buy a home. Home prices on average still are under $200,000 and mortgage rates are under 4%. This makes it less expensive than renting.

Meanwhile, if you are thinking about buying a home in the below states, you will need to have more money put away. These are the most expensive states in which to buy a home as of 2016:

#1 New Jersey

Buying a home in New Jersey is expensive primarily because of property taxes, which are the worst in the country. For the median priced home of $276,000, the tax bill would be $547 per month, which is a huge bite out of one's disposable income. Home values here also were slow to rise in 2016.

#2 Virginia

Residents of VA have some of the highest mortgage prices in the US. Also, the price to rent ratio in the state is high. This indicates that renting could be a better choice for some. The area around Washington DC skews the home prices in this state, and makes it a more expensive place to live.

#3 New York

NY has high property taxes and a median listing price of $320,000. Home values actually fell in 2016, so your purchase may not build equity right away.

The Bottom Line

Buying a home can be a great investment but it all comes down to where you live. Mortgage rates on first time home buyer loans have never been more affordable. You should strongly consider some of the most affordable states on the above list to get the best deal.

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