When deciding to invest in real estate, house prices are arguably the biggest determinant there is. What you can afford will determine what kind of investment property you buy, where you invest, and even how often you can invest. It’s no surprise, then, that cheap real estate is a hot commodity.
If you do wish to start investing next year or are hoping to add another investment property to your portfolio, then you’ll want to know: What are the US housing market 2020 house price trends and where are the cheapest housing markets in 2020? Keep reading as we explore the answers.
US Housing Market 2020: House Price Trends
In 2019, the national median price of homes sold has ranged from $299,400 to $339,000. Since the recovery from the recession, house price trends have been positive and, at times, prices have increased rapidly.
For 2020, house prices are projected to rise by 2.8%, according to Zillow. While there will be an uptick in property prices, the increase will take place at a slower rate than usual, which is a great benefit to aspiring real estate investors. A prime reason for the increase in property prices is high demand from millennial investors and home buyers, particularly for single-family homes.
You might be wondering, as many do in the face of increasing house prices, will there be a housing bubble in 2020? According to many experts, there will not be a housing bubble, but a nationwide economic recession might occur. Fortunately, the US housing market will not be a cause of the next recession.
Learn More: Is a US Housing Bubble Coming in 2020?
The 5 Cheapest Housing Markets in 2020
That leads us to the next question: What are the cheapest housing markets in 2020? But before we move on to the list, there is one aspect to consider: Affordable real estate markets are excellent for being inexpensive, but they might not always be profitable. However, using Mashvisor’s predictive analytics, we’ve compiled a list of the larger US cities where real estate properties are affordable and profitable.
Without further ado, the cheapest housing markets, and most profitable ones, in the US housing market 2020 are Pittsburgh, PA, Detroit, MI, Fort Wayne, IN, Fayetteville, NC, and Cleveland, OH.
- Median Property Price: $230,803
- Price per Square Foot: $84
- Price-to-Rent Ratio: 16
- Rental Income: $1,237
- Cap Rate: 3.4%
Out of the best places to invest in real estate for affordability in 2020, Pittsburgh is the most profitable. Aside from its affordable real estate, Pittsburgh’s cost of living is 5.8% lower than the US average. Its cost of living is also 7% lower than Philadelphia‘s, according to NerdWallet’s Cost of Living Calculator. This means that the city will continue to attract people to its properties. And with around 56% of the population living in rentals (according to NeighborhoodScout), the cost of living will only help grow your renter pool.
Not only is Pittsburgh among the cheapest housing markets, but it’s also home to a growing economy, which further pushes demand for real estate. With a 2.56% increase in the city’s median household income and a “remarkable municipal reinvention”, as mentioned by the PwC, the Pittsburgh traditional rental market will continue to see success in 2020. Multifamily investment properties, in particular, have been a popular and profitable niche in the city.
2. Detroit, MI
- Median Property Price: $168,689
- Price per Square Foot: $108
- Price-to-Rent Ratio: 14
- Rental Income: $1,031
- Cap Rate: 2.9%
Motor City has some of the most affordable real estate investments in the nation, with a property price of $168,689. Detroit’s cost of living is also below the national average- 5.6% lower. An expected warm seller’s market, demand is fairly high in the city. Like Pittsburgh, the resurgence of Detroit’s economy, particularly in its downtown, will drive up tenant demand in 2020.
- Median Property Price: $214,240
- Price per Square Foot: $107
- Price-to-Rent Ratio: 15
- Rental Income: $1,157
- Cap Rate: 2.2%
Fort Wayne, with a median property price of $214,240, is easily one of the cheapest housing markets in both the US and the State of Indiana. This is most apparent with its cost of living. Fort Wayne’s cost of living is 17% lower than the US average. It is also lower than the cost of living in multiple cities in Indiana, including:
- Bloomington (by 18%)
- South Bend (by 13%)
- Evansville (by 6%)
- Indianapolis (by 6%)
- Lafayette (by 3%)
- Elkhart-Goshen (by 3%)
Fort Wayne will also experience a high real estate appreciation rate in 2020. According to Zillow, the market’s house prices will increase by 5.6%, well above the national average. So, not only are Fort Wayne rental properties profitable through rental income, but they will also increase in value in the next year.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
- Median Property Price: $182,071
- Price per Square Foot: $85
- Price-to-Rent Ratio: 15
- Rental Income: $1,020
- Cap Rate: 1.8%
The next entry on our list of the cheapest housing markets for 2020 is Fayetteville. Fayetteville is similar to some of the cities on this list since its cost of living is significantly lower than the US average (by 13.4%). However, the city is unique in many ways.
For starters, the city’s real estate success is rare. It is one of the few markets that has a median property price that is below $200,000, and it has a high average rental income and return on investment. Fayetteville’s economic success is also fairly unique. The city’s economy is largely held together by two military installations, Fort Bragg and Pope Field pump, which contribute about $4.5 billion a year, according to the PwC Emerging Trends in Real Estate report. As a result, Fayetteville is one of the best retail markets in the country, being a center for lodging, restaurants, shopping, and health care.
- Median Property Price: $163,552
- Price per Square Foot: $102
- Price-to-Rent Ratio: 13
- Rental Income: $1,042
- Cap Rate: 1.7%
The last, but not least, of the best places to buy a rental property for affordability is the Cleveland real estate market. Like the other cheapest housing markets on this list, Cleveland’s cost of living is much lower (22.9% lower) than the national cost of living. Also, like the other markets on this list, the success of Cleveland’s traditional rental market in 2020 will be tied to its economic growth, particularly its manufacturing sector. These factors, and the low property price tags, make Cleveland an excellent housing market for a cheap investment property for sale.
The Bottom Line
Investing in the cheapest housing markets is not enough to guarantee a successful real estate investment. In order to have the best real estate investments for 2020, these markets must be profitable as well. The previously mentioned 5 markets have the best of both worlds in this regard, and we can’t recommend investing in them enough!
Now that you know what the cheapest housing markets are, you still need to know which neighborhoods to invest in! To figure out where to invest in real estate in the above cities, CLICK HERE to start your 14-day FREE trial with Mashvisor! Our Heatmap will help you find the cheapest neighborhoods.