This is the Best State for Homebuyers on a Budget

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24/7 Wall St. Insights

• Market conditions have made the cost of homeownership prohibitive for a growing number of Americans
• But thanks to lower-cost markets in many parts of the country, prospective homebuyers on a budget still have options
• Also: 2 Dividend Legends to Hold Forever

The median price of a listed home in the U.S. fell by 1.1% in July 2024, the first month-over-month decline in housing prices since January. Whether falling list prices are the beginning of a long-term trend or merely a blip remains to be seen, but either way, home prices remain at historic highs.

According to housing market data from Realtor.com, the median list price for a home in the United States is $439,950, only 2% below the all-time high of $449,000 reported in June 2022. With home prices hovering near record highs, and average mortgage rates above 6%, the cost of homeownership has become prohibitive for a growing number of Americans.

A recent report published by the Joint Center for Housing Studies of Harvard University found that only 6.6 million renters in the U.S. -- or about 14.5% of all renters -- could afford a median-priced home in the first quarter of 2024, down from 7.7 million in early 2023, and 10.2 million in 2022. As housing affordability continues to fall, many prospective buyers are reevaluating the kinds of homes their budget will accommodate, and settling on smaller, less expensive homes. (Here is a look at the American cities with the most expensive houses .)

Still, there are parts of the country where even a modest budget will go relatively far in the housing market.

Using data on median list price per square foot from Realtor.com , 24/7 Wall St. calculated the size of a house you can buy with $200,000 in every state. States were ranked by the approximate square footage of a $200,000 home, as of July 2024, from the smallest to the largest. Supplementary data on overall cost of living by state is from the Bureau of Economic Analysis . All other supplementary housing data is from Realtor.com.

Depending on the state, the approximate size of a typical $200,000 home ranges from 272 square feet (about the size of two parking spaces) to nearly 1,500 square feet. For context, the estimated size of a $200,000 home across the U.S. as a whole is about 866 square feet.

The states with the cheapest homes per square foot tend to have a lower than average overall cost of living, and in some of these places, most homes on the market are listed for less than $300,000. In many of these same states, the housing market appears to be cooling off. In nine of the 10 highest ranking states on this list, the median list price is lower now than it was a year ago. (Here is a look at the 10 cities that have become impossibly unaffordable .)

Why It Matters

Historically, most Americans have built wealth through homeownership. But current market conditions have priced out a large share of the population. With historically high list prices and borrowing costs, many prospective homebuyers are seeking lower-cost options -- and housing markets are far cheaper in some parts of the country than others.

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