This quandary is especially meaningful to residents of Motor City, who have experienced deepening levels of housing hell in recent years. Much has been written about Detroit’s high misery index, and the challenges of thriving in a city with high unemployment, high crime rates, and city services under severe budgetary constraints. And yet, for those willing to take a long view of the city, Detroit also offers amazing bargains to residents dedicated to living in that community.
Despite its problems, even in Detroit, it’s not unusual for multiple buyers to vie for an appealing home in a nice neighborhood. The city has one of the highest rental vacancy rates in America and boasts a four-month supply of homes on the market, according to a recent report in the Detroit Free Press. A buyer’s market is typically six or more months’ supply.
Many residents of depressed cities in Michigan, Florida, Indiana and Ohio have been slammed by job losses and tumbling housing prices, too, and recovery is coming slowly if at all. Yet, on the positive side, these towns also offer a low cost of living by American standards that make for attractive buy-side opportunities for those willing to take a long view of homeownership.
24/7 Wall St. asked Trulia, a leading provider of real estate listings and market data, to identify and rank cities by the median prices of homes sold last year. Trulia limited the list to markets with an adequate supply of non-foreclosure, single-family homes, which ruled markets that may have unusual spikes in median sales prices. To provide further context of how economic data can impact local housing market conditions we also gathered median-income data as well as Q1 2012 vacancy rates from the U.S. Census Bureau, unemployment numbers from the U.S. Bureau of Labor Statistics, and June 2012 foreclosure figures from RealtyTrac.
24/7 Wall St.: Countries where people work least
With home prices at 30-year lows and mortgages available at record-low rates, some residents in troubled cities will be tempted to take the plunge and buy a home. Yet, amid this fledgling recovery there’s still the allure of plunking down a small depositand buying a car that can take you to a city that offers a healthier housing market and stronger long-term job prospects.
These are the cities where homes cost less than a car:
- Median listing price: $21,000
- Comparably priced car: Chevy Malibu ($21,000)
- Housing price change (year over year): 5.2 percent
- Median household income: $29,447
- Unemployment: 9.9 percent
Detroit’s leaders are committed to reducing spending and creating a more livable and prosperous city for families and businesses of all sizes. The local automotive economy is improving, especially as Chrysler stages a comeback from its near-death experience. Some may interpret a year-over-year housing price increase as a positive sign for Detroit’s future. But unkind economists might call it a dead-cat bounce. Unemployment is not merely high, population is decreasing, and in 2010, one-in-five homes were vacant. Long term, that’s a lot of downward pressure on housing prices.
2. Flint, Mich.
- Median listing price: $31,950
- Comparably priced car: Chrysler 300 ($31,950)
- Housing price change (year over year): n/a
- Median household income: $28,835
- Unemployment: 8.9 percent
According to Trulia’s Kolko, both Flint and Detroit experienced significant housing-price declines, not because of overbuilding as in Florida but because of “long-term job decline coupled with declining populations.” Worse, Flint suffers from a significant amount of poverty with about 44 percent of the population earning less than $25,000 a year, according to Census economic data.