The Great Recession is forcing a lot of people to do more with less -- including a lot less money for their daily living expenses. And while consumers haven’t been migrating to the degree they did during the Great Depression, there are probably quite a few who would seriously consider moving to a less expensive area if they could.
So if you count yourself among that group, here are some cities that Forbes magazine says are among the most affordable metro areas of the country. As you might expect, many of them are in the mid-west.
Criteria
To compile its bargain city list, Forbes looked at the current median asking price of homes on the market in each city, using data from Altos Research, a San Francisco-based real estate research firm.
It then took into consideration the median salaries of workers with bachelor's degrees or higher from PayScale.com and compared it with a cost-of-living index from Moody's Economy.com. Moody’s uses such factors in its index as transportation costs, insurance, food, utilities and other factors.
Finally, it factored in the latest unemployment rates from the Bureau of Labor Statistics (BLS) to reflect the relative strength of local economies.
Buffetburg
According to Forbes, the best bargain as cities go is Omaha, Nebraska, which is also home to investment guru Warren Buffett. Why isn’t it surprising that one of savviest investors in the world would live in the most affordable place in the country?
Besides being the home of major corporations such as Warren Buffett's Berkshire Hathaway, Omaha has inexpensive real estate, a low cost of living and an unemployment rate that’s close to half the national average.
According to Moody’s Economy, Omaha's job market will actually grow by 1.6 percent in 2011 and according to the real estate database Trulia.com, be a "city that thrives in 2011."
Tara-Nicholle Nelson, consumer educator for Trulia.com, says Omaha’s home prices have stayed steady through the recession because they never inflated that much during the housing bubble.
The Midwest
Other Midwest bargain cities include Indianapolis, Indiana which came in at number four, Minneapolis-St. Paul, Minnesota, at number 7, Oklahoma City, number 9, Tulsa, Oklahoma, number 15) and Ohio's three largest metros, Cincinnati, number 5, Cleveland, number 8 and Columbus, number 13.
Indianapolis, Kansas City and Ohio's three enclaves have real estate deals available at low price points. Although Oklahoma City and Tulsa offer some of the lowest median salaries, their home costs are also near the bottom, making both cities highly affordable.
At $249,000, the current median asking price for homes in Minneapolis-St. Paul remains higher than those of its neighbors on our list. The Twin Cities make up for it in quality of life, touting low unemployment rates and a healthy cost of living vs. salary.
Stuart Gabriel, director of the Ziman Center for real estate at the University of California Los Angeles says that Minneapolis-St. Paul has very strong institutions of medical research and higher education, a highly educated population and a desirable amenity base. He adds that Minneapolis has weathered the downturn better than most places and its prospects continue to look relatively bright.
Surprising Detroit
This may surprising you, but Detroit, with its reputation for crime and urban decay actually came in third on the Forbes list. According to FBI data, Detroit is still a rough place with a staggering 13.3 percent unemployment rate and a high per capita crime rate. Plus its foreclosure rate is among the 10 highest in the U.S.
That said, if you have a college degree under your belt and a steady job to show up to, your money goes a lot further in Detroit than let’s say, New York, Chicago or LA. The median salary for workers with a degree is $60,600 while the cost of living is the second lowest of the 50 cities measured.
With a median asking price of $132,635, Detroit homes are also inexpensive. Gabriel warns that "the low house prices in Detroit are no accident. They're a reflection of depressed land values, depressed amenities, and depressed employment."
In other words, don't expect this overall housing market's value to rise anytime soon. Some experts believe it may even depreciate further in 2011. Detroit is a deal only if you have stable employment and are looking to buy a long-term home. Add to that a blossoming arts community and the hope that Detroit's auto industry is coming back and this city could be a great place for bargain-hunters.
Here’s the entire list of the top 15 most affordable cities on the Forbes list:
- Omaha, Nebraska (No. 1)
- Buffalo, New York (No. 2)
- Detroit (No. 3)
- Indianapolis, Indiana (No. 4)
- Cincinnati, Ohio (No. 5)
- Pittsburgh, Pennsylvania (No. 6)
- Minneapolis-St. Paul, Minnesota (No. 7)
- Cleveland, Ohio (No. 8)
- Oklahoma City (No. 9)
- Houston, Texas (No. 10)
- Raleigh, North Carolina (No. 11)
- Kansas City (No. 12)
- Columbus, Ohio (No. 13)
- Dallas (No. 14)
- Tulsa, Oklahoma (No. 15)
