We all know it's a buyer's market for real estate. But which cities offer the biggest bargains and why is it so cheap there? Here are the top five cities for buying low-priced real estate with the average home sale prices according to www.realtor.com.
- Detroit, MI. Average home sale price: $69,660.
Devastated by the fall of the automotive industry and its associated manufacturing and services, Detroit offers rock-bottom real estate prices. Real estate in Neighborhood Enterprise Zones and Homestead Districts also receive property tax breaks. The Bureau of Labor and Statistics reports an unemployment rate of 17.3% (as of September 2009) for Detroit's 916,952 citizens.
The good news is the city is working to reinvent itself by wooing companies in high-growth industries such as life sciences and information technology. Those who can stick out the transition benefit from a cost of living 26.5% lower than the national average.
- Indianapolis, IN. Average home sale price: $102,495.
Rated by Forbes as one of the top 40 safest cities, Indianapolis is more than just the home of the Indianapolis Motor Speedway. The population of 795,458 enjoys a cost of living 32% cheaper than the average U.S. city. The unemployment rate is 7.7%.
The city is accessible to multiple colleges and universities, which feed its major industries of life sciences, advanced manufacturing, logistics and information technology. (Learn the tricks of buying a home in a down market. Check out 5 Tips For Recession House Hunters.)
- Omaha, NE. Average home sale price: $148,196.
The city of Omaha has a population of 424,482. Though it sits in the middle of the agricultural heartland, Omaha is home to Fortune 500 companies Berkshire Hathaway, Union Pacific, ConAgra and Peter Kiewit Sons.
The unemployment rate is only 4.8% and the cost of living is 22% cheaper than the national average. Residents benefit from: high-quality clean air, major educational institutions (the University of Nebraska Omaha and Creighton University) and a crime rate lower than the national average.
- Des Moines, IA. Average home sale price: $151,843.
The Des Moines real estate market did not dip as much as other parts of the country with home prices decreasing a modest 5.6% over the past year. Des Moines is the capital of Iowa with a population of 196,998. The cost of living is 20% cheaper than the rest of the United States. The state sales tax is only 6% and the unemployment rate is also 6%. Major industries in Des Moines include: financial services, insurance, manufacturing and trade services.
- Bismarck, ND. Average home sale price: $161,247.
Bismarck's population of 59,503 has grown 5% since 2000. The city is home to multiple colleges and universities. The major employers in town include: government, healthcare, agriculture and manufacturing. Up and coming ventures include oil drilling and wind-turbine energy generation.
The cost of living is 21% cheaper than the national average. The unemployment rate is only 2.9% - low enough the make employers wonder if they'll be able to find enough employees. (When the housing market slumps, you'll need these tips to weather the storm. Don't miss Closing A Real Estate Deal In A Down Market.)
The Bottom Line
The cheapest real estate prices are available in the Midwest. These cities benefit from the abundance of land, sometimes surrounded by vast stretches of rich farmland. They are generally smaller cities that offer a slower pace of life.
With the exception of Detroit, the cities with the cheapest real estate have managed to escape some of the worst impacts of the economic downturn and have plans to take advantage of high growth opportunities.
Please note that the prices listed are a snapshot based on the data available. Real estate prices are fluid and impacted by multiple factors in a given geographic area.