Best Places To Live Cheaply

Daniel Fisher
Best Places To Live Cheaply

[gallery]

Sandusky, Ohio is a city with million-dollar water views and a whole lot of $100,000 houses. With a median family income of $64,000 and median home selling price of $76,000, this city on Lake Erie, midway between Cleveland and Toledo, could be the most affordable housing market in the country.

Throw in highly rated schools and a low crime rate and Sandusky tops the 2011 Forbes list of America’s Best Cheap Cities.

In Pictures: Best Places To Live Cheaply

To produce the list, we started with the NAHB/Wells Fargo Housing Affordability Index, where Sandusky ranked sixth behind such cities as Kokomo, Ind., Elkhart, Ind. and Springfield, Oh. Then we screened for the things homebuyers want to go along with a cheap house: Low cost of living, from Moody’s Economy.com.; low violent crime rate, from the Federal Bureau of Investigation; low unemployment rate, from the Bureau of Labor Statistics; and school quality from GreatSchools.org.

Sandusky got a boost from a suspiciously low June unemployment rate of 7.7%. Turns out the city’s unemployment level drops every summer when the giant Cedar Point Amusement Park, a unit of publicly traded Cedar Fair LLP, hires more than 3,000 temporary workers. The rest of the year, the economy isn’t so rosy in the Sandusky area, home to three auto-parts factories and many smaller manufacturers dependent upon the fickle auto industry.

“A few months ago we started getting calls because we had the highest job growth rate in the country,” said John Moldovan, president of the Sandusky Chamber of Commerce. “But there’s not the kind of economic activity here to justify those numbers.”

Still, raising Sandusky to the national average of 9.5% doesn’t change its Forbes rating. The city’s violent crime rate of 247 per 100,000 residents is half the national average. And despite a dense city core with a lot of rental housing, Sandusky rated 7 out of 10 on the GreatSchools.org index, reflecting high student test scores.

And then there’s the waterfront, more than 20 miles of it within city limits including the narrow Cedar Point luxury area where “you can dock a boat in Sandusky Bay in the back and swim in Lake Erie in front,” said Ruth DeHenning, chief executive of the five-county Firelands Association of Realtors. Don’t expect to find a $100,000 house there; most go for $1 million or more. But DeHenning says there are plenty of houses in the $200,000-to-$300,000 range because young families in starter homes are reluctant to trade up until the economic picture improves.

One message comes through loud and clear with this screen. The middle of the country is a better deal than the coasts. Seven of the top 10 cheapest cities are in the Midwest. Only one city among the top 40, Ocala, Fla., is within 100 miles of an ocean. Despite this apparent bargain, the latest census shows that the South and West gained more than 13% in population between 2000 and 2010, while the Midwest trailed at 3.9% and the Northeast gained only 3.2%.

Screening for crime and schools pushed some cheap cities down the list and lifted some relatively expensive ones up. Rockford, Ill. was among the 10 most affordable cities on the NAHB survey but fell to 16th on our list after accounting for the stratospheric crime rate of 1,300 violent crimes per 100,000 in this city of 150,000, triple the national average. (The FBI notes that seemingly high crime rates can be due to aggressive law enforcement, among other things.) Wheeling, W. Va. landed in the Forbes Top 10 despite ranking 21st on the NAHB survey because of its low crime rate – half the national average – and schools that ranked 8 in the Greatschools.org survey.

There must be something about Lake Erie, too: Monroe, Michigan came in a close second on the Forbes list. The small city halfway between Toledo and Detroit is third-oldest in Michigan and the birthplace of General George A. Custer, Monroe shock absorbers and the La-Z-Boy recliner. It’s also a screaming bargain: With a median household income of $69,000 and median home price of $101,000, the NAHB estimates 97.8% of the homes sold are affordable to median-income families.

Monroe has an envious combination of high-paying jobs and low costs, thanks in part to the profusion of relatively prosperous manufacturing businesses in the area. In addition to La-Z-Boy and Monroe (now part of Tenneco), the city’s residents are employed at a nearby Detroit Edison power plant and a Gerdau Steel plant that is the Brazilian manufacturer’s most productive U.S. factory. Gerdau recently invested $67 million, says Monroe Mayor Robert E. Clark, while Ventower just built a wind-turbine factory that will employ 150.

“We’re seeing growth in this city where other parts of the state, and the country, are not,” said Clark. Part of that is due to Monroe’s strong educational system. Voters in Monroe County recently renewed a 0.98 cent-per-$1,000 property tax to pay for technology in the schools and the local community college works closely with employers to develop worker training programs. According to the Census Bureau, 87% of Monroe adults are high school gradautes and 17% have a bachelor’s degree or higher.

In Pictures: Best Places To Live Cheaply

After a long lobbying effort by local and state officials, the U.S. Park Department last year established the River Raisin Battlefield National Park, the nation’s newest, on the site of the battlefield with the largest loss of life in the War of 1812. It’s also the site of an annual jazz festival that will feature headliner Kenny G this year. Who says there’s no culture out in the sticks?

Also in the Top 10 cheapest cities this year were Kokomo, Ind.; Bay City, Mich.; Pocatello, Id.; Springfield, Ill.; and Wheeling, W.Va. Fairbanks, Ak. made the list as well even though its median home price of $216,000 puts it well above the other cities. An NAHB official explained that low property taxes and a large supply of homes around the median price range gave Fairbanks a high affordability index score.