Cheapest States to Buy a Home – 2020 Edition

Owning a home is a major goal for many people across the U.S. Securing a mortgage and buying that home, though, can be difficult to achieve. According to a June 2020 Home Values report from Zillow, the median home value in the U.S. is $248,857, an uptick of 4% over the past year. Though values are expected to fall about 1.5% in the year ahead, just how much you’ll be spending largely depends on where you’re living. That’s why SmartAsset crunched the numbers for the 2020 edition of our study on the cheapest states to buy a home.

To find the cheapest states to buy a home, we analyzed data on all 50 states and the District of Columbia across the following five metrics: effective property tax, median listing price, median listing price per square foot, median value in the bottom one-third of homes and average closing costs. For details on our data sources and how we put all the information together to create our final rankings, check out the Data and Methodology section below.

This is SmartAsset’s second study on the cheapest states to buy a home. Read the 2019 version of the study here.

Key Findings

• Top 10 holding steady. Nine of our top 10 states are repeats from our 2019 edition of this study. The average listing price for a home across these nine states is less than $187,000. The only new state to enter the top 10 this year was Louisiana, replacing South Carolina (which dropped to No. 12 this year).

• The coasts will cost you. The bottom 10 locations in our study are all on either the East or West Coast. The West Coast states are Washington State, California, Hawaii and Oregon. The East Coast representatives: Massachusetts, New Jersey, the District of Columbia, New York, New Hampshire and Maryland. The average listing price for a home across these nine states plus Washington, D.C. is more than $442,000.

1. West Virginia

The cheapest state to buy a home in is once again West Virginia. The median listing price in the Mountain State is $165,000 – the lowest median price in the study. West Virginia also ranks first for its low median value of the bottom third of homes, at $53,600. The state comes in second-best for its affordable median listing price per square foot, at $97.

2. Arkansas

Arkansas places in the top five of the study for three of the metrics we considered. It has the second-lowest median value of the bottom one-third of homes (at $62,900), the third-lowest median listing price per square foot (at $101) and the fifth-lowest median listing price in the study (at $176,000).

3. Alabama (tie)

Alabama also places in the top five for three of the metrics we studied. It places second for its low effective property tax rate, at 0.40%. It comes in fourth-best for two other metrics: a median listing price per square foot of $105 and a median value for the bottom third of homes of $66,100.

3. Mississippi (tie)

Another southern state, Mississippi, is tied with Alabama for third place in our study. Mississippi leads this study for its affordable median listing price per square foot, at $96 per square foot. The median value of the bottom one-third of homes is $70,800, the fifth-lowest amount for this metric in the study. Mississippi residents do pay a bit more than some to their state, with an effective property tax rate of 0.78%, 18^th-lowest overall. However, the state still ranks within the top 10 of the study for median listing price and average closing costs.

5. Indiana

The Hoosier State has the second-lowest average closing costs in the study, at $2,627. Indiana also is tied for the fifth-lowest median listing price per square foot, at $108. It has the seventh-lowest median listing price overall, at $186,000. Its effective property tax rate, at 0.82%, ranks toward the middle of the pack.

6. Oklahoma

Oklahoma has the third-lowest median value for the bottom third of homes, at $64,100. The state’s new homeowners can also expect relatively low closing costs, with an average of $2,673, the fifth-lowest in the study. Oklahoma also ties for the fifth-lowest median listing price per square foot, at $108.

7. Kentucky

Kentucky has the third-lowest average closing costs in the study, at $2,642. It ranks seventh overall for its affordable median value of the bottom third of homes, at $76,700, and eighth overall for an affordable median listing price per square foot, at $118.

8. Missouri

Missouri ranks in the top 10 across all 50 states and the District of Columbia for three of the five metrics we examined in this study. It has the fourth-lowest average closing costs (at $2,656), the seventh-lowest median listing price (at $186,000) and the ninth-lowest median listing price per square foot (at $120).

9. Louisiana

Louisiana, the only state in this year’s top 10 that wasn’t there last year, has the fourth-lowest effective property tax rate in this study, at 0.55%. The Bayou State also places 11^th-best for its affordable median listing price per square foot, at $122, and 13^th-best for its relatively low median value of the bottom third of homes, at $93,300.

10. Ohio

The final state in the top 10 is Ohio. Despite coming in 39^th overall for its relatively high effective property tax rate (at 1.52%), the state ranks in the top 10 for three different metrics: No. 2 for low median listing price (at $169,900), No. 5 for low median listing price per square foot (at $108) and No. 8 for low median value of the bottom third of homes (at $81,700).

Data and Methodology

To find the cheapest states to buy a home, we analyzed data for all 50 states, plus Washington, D.C., across the following five metrics:

• Effective property tax rate. Data comes from the Census Bureau’s 2018 1-year American Community Survey.

• Median listing price. Data comes from Zillow and is for January 2020.

• Median listing price per square foot. Data comes from Zillow and is for January 2020.

• Median value of the bottom one-third of the market. This is the median value for all homes in the bottom third of home values in the state. Data comes from Zillow and is for January 2020.

• Average closing costs. Data is from SmartAsset’s closing costs calculator and is for March 2020.

First, we ranked each state according to each metric. Then we found the average ranking for each state, assigning each metric an equal weight. We used these average rankings to determine our final score. The state with the highest average ranking received a score of 100. The state with the lowest average ranking received a score of 0.

Money Management Tips for Homebuyers

• How much house can you afford? Make sure you use SmartAsset’s tool to see how much house you can afford before you start looking around.

• Bolster your budgeting skills. Saving money for a home is hard, but it is easier if you have a set budget you stick to.

• If possible, invest in expert advice. A financial advisor can help you put yourself in a position to buy a house wherever you live. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool connects you with financial advisors in your area in five minutes. If you’re ready to be connected with local advisors, get started now.

Questions about our study? Contact press@smartasset.com

Photo credit: ©iStock.com/courtneyk

The post Cheapest States to Buy a Home – 2020 Edition appeared first on SmartAsset Blog.