The Most Undervalued U.S. Housing Markets
As inflation continues to decrease and real estate experts anticipate a further decline in mortgage rates in the coming months, many homebuyers and sellers are poised to re-enter the housing market. For buyers, this presents an opportunity to make their first step onto the property ladder, find more space, or secure a better location. For sellers, it could mean downsizing from a large home, upgrading to accommodate a growing family, or relocating due to the “three D’s”: death, divorce, or debt.
According to U.S. News, a general rule from the Department of Housing and Urban Development states that households spending more than 30% of their gross monthly incomes on a place to live are “cost burdened.” This burden has become even more important given the compounded inflation spike U.S consumers have experienced over the last three years and leaves even less room for spending on other necessities of life, such as food, clothing, transportation and health insurance.
For our rankings of overvalued and undervalued markets, instead of household income, we look more closely at local per capita incomes since that’s considered by some to be a better measure of an area’s wealth. Overvalued and undervalued markets are those in which households are respectively spending far more or less on their housing costs compared with the national per capita income.
For this analysis, monthly housing costs substantially below the national median per capita income for owning (39.8%) or renting (34.4%) indicate an undervalued market. Our data for these rankings are primarily sourced from the U.S. News Housing Market Index, an interactive platform providing a data-driven overview of the housing market nationwide.
These rankings are based on data from May 2024, which provide the most recent and comprehensive data from the index. Visitors investigating various housing markets should check back with the online interface for updates at least once per month. See the methodology here.