Big City Buyers Get A Better Bang For Their Buck in These Metro Markets

Many home shoppers scouring this summer for properties they can afford have been discouraged. But often it pays to look outside your comfort zone and consider other areas – including out-of-state markets – to find the best deals.

Case in point: A recent report indicates that the earnings required to afford an average home have dropped in several big cities across the country. Let’s take a closer look at these markets, better understand why prices have declined there, and explore ways you can find home bargains and save more money.

What the research found

A recent Redfin analysis shows that the income needed to afford a typical home has fallen in 11 of the 50 largest metros in America, mostly in Sun Belt areas where rising inventory has cooled prices.

While buyers nationwide need to earn around $112,000 to afford the median home, per Redfin, that figure has declined in Oakland, West Palm Beach, Jacksonville, San Diego, Tampa, Atlanta, Phoenix, St. Louis, Orlando, Sacramento, and Dallas. These markets saw rapid growth during the pandemic, but increased construction and softening demand are now making homes slightly more affordable.

Here’s a breakdown of these 11 markets and what you’ll need to earn to comfortably own a median-priced residence:

The declines reflect a sluggish housing market marked by high costs, economic uncertainty, slower sales, and growing inventory, with homes taking longer to unload and more sellers than buyers in many areas.

How to interpret these findings

The experts believe this Redfin report underscores a larger trend: In many areas of the country, prices rose at a significantly higher rate than income – which was surprising in an increasing interest rate environment.

“These 11 markets saw huge pandemic-era growth, but new construction and slower demand have increased inventory and taken some heat out of bidding wars,” says Zev Freidus, president of ZFC Real Estate. “For instance, in places like Tampa and Orlando, prices are not crashing but leveling off, and sellers are more open to concessions like covering closing costs.”

Steven Glick, director of mortgage sales for HomeAbroad, believes this study reveals a sliver of relief in a tough housing market.

“Nationally, you need about $112,000 in income today to afford a median home priced around $447,000,” he says. “But in these 11 big metros, mostly in the Sun Belt, the income required has actually dropped because home prices are cooling. Softer demand and more homes on the market, thanks to new construction, mean buyers have a bit more leverage. It’s not a sign of a full-on buyer’s market, but it’s an indication that housing cycles are shifting, giving folks a chance to catch their breath.”

The main takeaway? If you’re willing to be flexible on location, buying in a relatively large market where housing supply is increasing can give you better leverage as a buyer.

“We have reached a point in many areas where something had to give – either lower interest rates, higher income, or decreased housing prices,” notes Bruce Ailion, a Realtor and real estate attorney. “What finally gave was housing prices.”

Why these 11 markets are worth considering

Many industry professionals aren’t surprised that these metros identified by Redfin are ripe for the picking among affordability-minded purchasers today.

“In Phoenix, for example, on-the-ground agents are calling it a buyer’s market. Homes not priced right or in 10-out-of-10 condition are lingering, and sellers are offering five-figure credits to get deals done. For first-time buyers, that can cover rate buydowns or closing costs and keep cash-to-close more manageable,” explains Alex MacLagan, senior mortgage advisor for MacLagan Home Loans. “And in these Florida markets on the list, price softening is tied not only to more supply but also to higher ownership carrying costs, like homeowners insurance. That dynamic pushes sellers to meet the market and opens room for negotiation, particularly on homes sitting for over 30 days.”

In West Palm Beach in particular, inventory growth means buyers can negotiate more confidently, something that was nearly impossible to do two years ago, Freidus notes.

“Also, in Atlanta, the income needed to purchase has fallen about 2%, and new homes are flooding the market. Suburbs like Decatur or Smyrna have townhomes under $400,000 that feel spacious. Plus, Georgia’s first-time buyer programs, offering up to $7,500 in down payment help, make it even sweeter,” Glick continues. “These markets work for rookies because sellers are motivated, homes are taking longer to sell, and you’re not fighting bidding wars.”

Jon Burke, a real estate agent with KW Bay Area Estates, represents clients in the market that ranks tops on Redfin’s list: Oakland.

“These results are accurate, not just for Oakland and Sacramento but all over the Bay Area, which is known for some of the most expensive real estate in the world,” he says. “We are definitely seeing a leveling off of home prices across the Bay, and even in San Francisco – where politics and other city-specific issues have driven prices down, leading to some very good buyer opportunities.”

Other affordable metros

You can find even bigger bargains in other large cities across the country right now.

“If you want absolute affordability, look at larger Midwest/Rust Belt hubs like Detroit, Cleveland, and Pittsburgh. They still post some of the lowest incomes needed to purchase among big metros, which stretches first-time buyer dollars further, even as prices in those cities have ticked up,” adds MacLagan.

Keep Chicago on your radar, as well, where the income needed to afford a median-priced home has risen 6.7% but which is still below the national average, Glick points out.

“Markets like Charlotte and Houston have a similar story, with steady population growth and strong job bases, along with increases in new housing supply, that help keep prices from running away,” Freidus says. “Houston and Charlotte aren’t the cheapest overall, but compared to their size and job markets, they still deliver good long-term value.”

How to locate an affordable home and save more money

To improve your odds of landing a bargain and paying less, follow these tips:

• Look for stale listings. “Seek out homes that have been on the market more than 30 to 45 days in their markets. They may present opportunities to make a below-list offer and have no competition,” suggests Burke.
• Find motivated sellers. “People dealing with life transitions are typically highly motivated to unload their homes, as challenges such as death, divorce, disability, downsizing, diapers, or forced relocation can present a better opportunity for home shoppers,” Ailion advises. “Sometimes, a listing will specify the reason for sale. Your agent should definitely ask and try to find out.”
• Be flexible on timing. “Some sellers are juggling multiple moves and may value a quick close over top dollar,” says Freidus.
• Consider shopping for new construction and quick move-ins. “New homebuilders often provide interest-rate buydowns or closing cost help, especially in inventory-rich Sun Belt metros,” says MacLagan.
• Get preapproved for a mortgage. This demonstrates to sellers that you are serious and can fine-tune your budget.
• Work with a local agent. “They know where the values are rising in that particular market,” Glick says.
• Improve your credit score. Aim for a score above 740 to qualify for lower rates, which can slash hundreds off your monthly payment.
• Hunt for first-time buyer assistance. Many big cities offer 3% to 5% down payment help, including programs in Phoenix and Atlanta.
• Negotiate seller concessions. “I’ve seen $5,000 to $10,000 covered by motivated sellers for closing costs or repairs,” adds Glick.
• Don’t limit your search to move-in ready properties. “Consider purchasing a home that needs light cosmetic updates, as these properties can often be purchased below market value,” recommends Freidus.

Target shoulder neighborhoods. “In metros like Dallas, Phoenix, and Tampa, widen your search one ring out to transit-served suburbs, where days on the market tend to be higher and list-to-sale ratios are thinner,” MacLagan suggests.

The bottom line

While affordability challenges persist nationwide, these 11 major metros, and others like them, show that opportunities still exist for savvy buyers. Rising inventory, more days on market, and motivated sellers are shifting leverage back to buyers in select markets.

By staying flexible on location, watching for stale listings, and taking advantage of local incentives or seller concessions, today’s house hunters can stretch their dollars further.