Cheapest States and Best Value States for Home Purchases in 2023

West Virginia is the cheapest place to buy a home. But if you’re looking for best value, look towards Minnesota. Scholaroo developed a comprehensive report on home values that delves into the affordability of housing across the United States, focusing on five key metrics: median home value, mortgage-to-income ratio, average monthly household income, average monthly mortgage payment, and property taxes. West Virginia emerges as the most affordable state with a median home value of $166,870. Connecticut boasts the most favorable mortgage-to-income ratio at 22.95%.

On the other hand, most expensive areas aren’t a surprise. Hawaii came in first at $850,934. California placed second at $707,717, followed by New York at $558,897.

What’s the Impact of Affordable States on Real Estate Investors?

For real estate investors, this report offers a treasure trove of actionable insights. States like West Virginia provide a low entry point for investment, making it easier to diversify portfolios. Connecticut’s favorable mortgage-to-income ratio suggests a more sustainable investment environment, reducing the risk of mortgage defaults. The report’s robust methodology, which involves a weighted average across five key metrics, offers a holistic view of the housing market in each state. High median home values in states like Hawaii could indicate a more speculative market, requiring a more substantial initial investment. The mortgage-to-income ratio in Hawaii stands at a significant 39.69%, indicating a less favorable investment climate.

In terms of value for money, Minnesota stands out. While the report doesn’t provide specific figures for Minnesota, its methodology would consider a balance of affordable home prices and favorable mortgage-to-income ratios, making it a potentially lucrative market for investors.

The report serves as a comprehensive guide for 2023, offering valuable insights for both homebuyers and investors. Home affordability, housing shortages, supply chain issues and related building factors have contributed to a more volatile environment. For investors, keeping an eye on these metrics could be crucial for making informed decisions in the coming year.

Ideally, an investor should take this data, compare it to rents in the area and find data points for factors such as population growth, building permits and other indicators to decide where to buy real estate in 2023 and the next few years.