For some American families, a house in a tiny bucolic burgh might prove a less expensive option than putting down roots in a large city. But this widespread concept of idyllic and inexpensive “town and country” life is, in general, a myth, say experts, who published a new study to back that up.
Researchers for LendingTree found home values in the country’s priciest micropolitan areas (“towns” for the purposes of their report) rival those in the nation’s largest metros.
Desirable vacation spots (Breckenridge, Colorado, for example) often have a limited housing supply to begin with, so when affluent out-of-towners snap up inventory, it further drives up house prices and pushes out local lower-income earners, noted Senior Economist Jacob Channel in an editorial for LendingTree.com. The small-town residential real estate shortage is felt in lesser-known places too.
“Rural areas often see a significant lack of housing development because construction is prohibitively costly and usually considered not profitable enough to be worthwhile for builders,” Channel said. “This means buyers in many towns have to compete for a relatively small number of homes, which puts upward pressure on prices.”
Restrictively expensive homes are not a feature of all micropolitan areas, Channel noted.
“Some towns are very affordable and there may be instances where a would-be buyer would have an easier time buying a house in a town than in a city,” he said. “Nonetheless, the idea that housing is inherently less expensive in towns than in cities is largely fiction.”
Per LendingTree’s study, towns (with 10,000 to 50,000 residents) featuring the most expensive real estate in the U.S. include:
- Number 1: Vineyard Haven, Massachusetts
- Number 2: Jackson, Wyoming
- Number 3: Breckenridge, Colorado
- Number 4: Steamboat Springs, Colorado
- Number 5: Hailey, Idaho
Median home values in these low-population places run $998,100; $847,300; $760,000; $691,800; and $534,900, respectively.
“This means a median-value home in Vineyard Haven is in the same ballpark as one in San Francisco ($1,073,300), and those in Jackson and Breckenridge are worth about as much as those in Los Angeles ($772,000),” Channel said.
Median household incomes ($93,225; $102,435; $100,611; $95,144; and $81,271) are higher in the top five than in most other areas—but not high enough to offset high home values, the study found.
In Vineyard Haven, for example, the median value of a home is 10.71 times higher than the median household income for the area.
Relative to median household income, the most affordable small-town homes can be found in Evanston, Williston, North Dakota; and Rock Springs, Wyoming.
“The median home value in these areas is an average of only 2.95 times higher than the median area household income, which implies homes in each town are relatively affordable,” Channel said.
The Senior Economist suggests that before hunting for a house in a low-supply, high-cost little town, prospective homebuyers do what they can to strengthen their credit scores, shop around for the best possible mortgage rates, and consider different types of loans, such as the U.S. Department of Agriculture-backed loans for lower-earning borrowers.
The full ranking of micropolitan towns in America by median house value, along with further commentary, is available here.
The post ‘Largely Fiction’: New Study Debunks Small-Town Affordability Myth first appeared on The MortgagePoint.
