Though home prices in most areas around the country remain weak, the attractiveness of purchasing a home continues to diminish in the wake of the real estate bust. Fears of price erosion, a weak economy and foreclosure dog markets coast to coast.
But not everywhere. In places like the suburbs of Rochester, N.Y., houses look like a great buy. You can get a relatively new 3,000-square-foot home on a nice quarter of an acre lot in a good school district for between $300,000 and $400,000. "The real estate here is very inexpensive, it's about the same as renting and it actually makes sense for families," says Delores Conway, a real estate economics professor at the University of Rochester. "The houses are solid investments with good school systems that are fairly priced."
According to recent data put together by real estate website Zillow, Rochester is the best place to buy a home in the United States. One of the reasons Zillow rates Rochester so highly is that its foreclosure rate is a minuscule 0.24%.
In order to figure out the best places to purchase a home in the country, Zillow looked at four statistical measures in 125 metro areas as of the end of February. These factors included affordability, as measured by home price to income ratios; the unemployment picture (both the absolute figure and how it's trending over time); the foreclosure situation; and year-over-year housing price trends.
"The list is populated by markets that did not participate in the housing run up from 2000 to 2006 and therefore their housing recession has been milder," says Stan Humphries, chief economist at Zillow. "These markets are very affordable, where people are typically spending under 2.5 times their income on a house so it's pretty affordable, and they are now spending what they were paying in the 15 years between 1985 and 2000."
The housing recession in places like Pittsburgh was relatively mild, helping to land Pittsburgh second on the list of best places to purchase a home. Like Rochester, Pittsburgh depends on major university employers such as the University of Pittsburgh and Carnegie Mellon. The former Steel City's median home price is an inexpensive $103,900.
The best places to purchase a home in America are mostly in the heartland, reflecting the coastal nature of the housing boom and bust. None of the best places to purchase a home are located on the West Coast in states like California, Oregon and Washington, not to mention Nevada and Arizona.
There are, however, places in the center of the U.S. that figure to be great for home purchases. In Oklahoma, Oklahoma City and Tulsa are both energy belt areas with strong economic fundamentals and housing markets that have been steady for years. And at 4.1% Lincoln, Neb., has the lowest unemployment rate of any metro area in the nation, and it's falling. All three cities made the list.
Here are the nation's five best places to buy a home right now:
5. Tulsa, Okla.
|Tulsa is the 5th best place to buy a home now |
Photo: Mark Gibson/DanitaDelimont/Newscom
The energy belt is a good place for homeownership as Tulsa residents can attest.
Midpoint price: $105,400
Foreclosure rate: 0.27%
Price appreciation quarter-to-quarter and year-to-year: -4.1% / -9.3%
Unemployment rate: 6.5%
Year-over-year change in unemployment: -1.8%
|Oklahoma City is the 4th best place to buy a home now |
Photo: John Elk III/Lonely Planet Lonely Planet Images/Newscom
OKC has been booming job-wise, while the rest of the country recovers more slowly from the downturn.
Midpoint price: $109,400
Foreclosure rate: 0.24%
Price appreciation quarter-to-quarter and year-to-year: -3.6% / -3.9%
Unemployment rate: 5.2%
Year-over-year change in unemployment: -1.6%
3. Utica, N.Y.
|Utica, NY is the 3rd best place to buy a home now |
Photo: Richard Cummins/Alamy
This old industrial hub in upstate New York is still small. But it's been quietly reviving by attracting immigrants from Eastern Europe and Asia while remaining affordable.
Midpoint price: $98,600
Foreclosure rate: 0.08%
Price appreciation quarter-to-quarter and year-to-year: -0.7% / 2.1%
Unemployment rate: 8.6%
Year-over-year change in unemployment: 0.1%
|Pittsburgh is the 2nd best place to buy a home now |
Photo: Jeremy Edwards/Istockphoto
Where else can you find a typical home that costs just barely six figures, root for championship sports teams, and get hired by a top university or hospital? Pittsburgh, the host of 2009's G-20 conference, has it all. What's more, Western Pennsylvania's nascent natural gas industry should provide growth for years to come.
Midpoint price: $103,900
Foreclosure rate: 0.50%
Price appreciation quarter-to-quarter and year-to-year: -2.2% / -1.5%
Unemployment rate: 7.4%
Year-over-year change in unemployment: -1.5%
|Rochester is the best place to buy a home now |
Photo: Andre Jenny Stock Connection Worldwide/Newscom
Known as the historical headquarters of past-their-prime corporate icons like Kodak, Xerox and Bausch & Lomb, Rochester suffered decades of painful contraction before finding its equilibrium. The end result is affordable housing underpinned by strong remaining employers like the University of Rochester.
Midpoint price: $116,000
Foreclosure rate: 0.24%
Price appreciation quarter-to-quarter and year-to-year: -2.0% / -3.9%
Unemployment rate: 7.7%
Year-over-year change in unemployment: -1.0%