10 Cheapest Housing Markets

The cost of housing has to be a major consideration for retirees looking to make their savings last, considering that it eats up such a large share of annual income.

Experts recommend that people spend no more than 30% of their income on housing, but the cost of a place to live has risen steadily despite the fact that salaries haven’t — and the 30% recommendation has been around for years.

In fact, the less a household’s median annual income, the larger a percentage of it they’ll be spending on housing, with a Pew Charitable Trusts report earlier this year finding that households with annual incomes in the lower third spent 40% of their income on housing in 2014. Renters in that third spent even more — nearly half of what they made.

With housing prices having escalated to the point where the median price of a home in a U.S. metro area is now above the $1 million mark — so says 24/7 Wall St. — what they’ll end up paying for a place to live has to be factored into anyone’s retirement plans, no matter where they live. After all, that’s when they’re planning on getting by on less income than during their working years, and will have less flexibility in income to make up for any blips.

In January, Kiplinger forecasted that home prices would moderate during 2016 because of tight supply, and Bankrate.com has pointed out that fall can be a good time to buy a house because of slowing home-buying activity. That said, however, Trulia reported near the end of July that homebuilding is weak and prices are rising. That tighter supply could mean that would-be buyers could once again see bidding wars in really tight markets.

While housing availability is more elastic in some markets than others, where to buy depends on a great many factors in addition to price. Would-be retirees keeping an eye on the final cost also have to consider the many other aspects of retirement living in any given area. Still, when trying to stretch those retirement dollars as far as possible, dropping too many of them on a new home would be a mistake.

To determine the most and least expensive housing markets, 24/7 Wall St. reviewed median single-family home prices from the National Association of Realtors. Salaries within a region play a large part in determining housing prices, since housing prices tend to correlate with an area’s median household income.

And while nationwide, the median household income is more than enough to qualify for a mortgage to purchase a typical home, that doesn’t hold true for the most expensive housing markets — where would-be buyers could need multiples of their salary just to get their feet over the threshold. In fact, homeownership rates actually come in higher than the national rate in 24 of the 25 cheapest markets. The opposite is true in expensive markets, with the homeownership rates lower than the national rate in the majority of areas.

To identify the most and least expensive housing markets, 24/7 Wall St. reviewed median single-family home prices in the second quarter of 2016 as released by the National Association of Realtors. Qualifying incomes assuming a 20% down payment for metro areas are also from the NAR for the same time period. Median household incomes and homeownership rates are from the U.S. Census Bureau’s 2014 American Community Survey. 24/7 Wall St. then calculated monthly mortgage payments using a 3.9% interest rate and assuming a 20% down payment — the same measures used by the NAR to compare housing affordability at the metro area level.

With all that in mind, here’s 24/7 Wall St.’s 10 cheapest housing markets.