These U.S. Cities Are Overflowing with Affordable Single-Family Homes Under $300k

With median house prices in the U.S. inching towards half a million dollars and mortgage rates back over 7%, homebuyers and investors alike are getting choked out of the market. Although there are several cities in the Midwest and South where you can still buy homes for $100,000, they tend to be the exception rather than the norm. 

Despite the shortage of houses, according to Realtor.com, there are several markets where you can buy a quality home in a good neighborhood for under $300,000. 

The seven cities identified are:

1. Birmingham, Alabama
2. Buffalo, New York
3. Cleveland, Ohio
4. Detroit, Michigan
5. Pittsburgh, Pennsylvania
6. Rochester, New York
7. St. Louis, Missouri

With rents increasing and mortgage approvals tightening, these moderately priced homes might still struggle to break even at current interest rates—even with a conventional down payment of 20%—so they would need to be purchased for cash or with a sizable down payment and then refinanced when rates drop. 

However, buying now—and catching an upward price cycle—would put you ahead of the buying frenzy when rates eventually come down. Also worth considering is buying a primary residence in these affordable cities to keep your debt-to-income ratio down while investing here for the long term. 

Here’s a look at three of the identified markets.

Birmingham, Alabama

Median house prices in Birmingham rose by 4% annually to $290,000 in March 2024. The good news for buyers and investors is that listing inventory rose 27.6% year over year. 

A completely remodeled, detached 1,700-square-foot single-family ranch home with three bedrooms, two bathrooms, and a garage currently costs $290,000 in Birmingham. 

The University of Alabama anchors the city, which employs 23,000 people. It also has a robust car manufacturing industry (Honda and Mercedes have plants here) and finance and healthcare industries that traditionally tend to stay. There is also a burgeoning short-term rental market, with the number of listings doubling over the last 12 months, according to AirDNA.

“I realized that Birmingham has one of the best real estate markets in the nation, from a returns perspective as well as from a barrier-to-entry perspective,” investor Stephen Yin told Business Insider in 2022. “In a lot of neighborhoods, you can get a three-bedroom, one-bathroom for under $100,000.” 

Since then, Birmingham has been one of the fastest-appreciating cities in the South. In March 2024, the median listing home price was $179.900, up 20% year over year. The median home sold price was $225,000, according to Realtor.com. The city has a low unemployment rate of 3.1% as of February 2024 compared to 3.8% nationally, with 54% of the city being renter-occupied, according to RentCafe, so there’s a large tenant pool.

 In recent years, Alabama has been one of the sleeping giants of the South from a real estate investment perspective. However, with relatively low purchase prices, it’s a great place to invest once all other metrics are considered.

Buffalo, New York

Buffalo has been the poster child for an economic turnaround. The snowy industrial city in Western New York, bordering Canada, has benefitted from a decade of city initiatives that have poured billions into parks, public art projects, and apartment complexes. The 2020 census figures showed the population increasing for the first time in 70 years. 

The city’s metro median list price of $270,000 is up almost 10% in the last year, with inventory increasing by 4.2%. For that price, you can purchase a fully renovated 1,444-square-foot single-family home with three bedrooms and 1.5 baths, with a two-car garage. Healthcare, banking, manufacturing for car parts, and retail groceries are some of the biggest employers in the area, while Buffalo (SUNY) University employs almost 6,000 people.

There have been double digital rental increases in the last few years, with some tenants experiencing 30% rent hikes. RentCafe cites Buffalo as one of the country’s top 20 most competitive small rental markets. With 57% of the households in Buffalo renter-occupied, according to RentCafe, it remains a great place to invest despite competition for homes.

Cleveland, Ohio

Cleveland was recently put in the global—or at least the U.S.—spotlight. The women’s NCAA Final Four was on Sunday, April 7; the following day, the city was a prime viewing location for the solar eclipse. No wonder mayor Justin Bibb enthused, “I see dollar signs, dollar signs, dollar signs everywhere,” as out-of-towners converged on the city.

Those two events represented a fitting fulcrum to Cleveland’s economic turnaround. Greater Cleveland (the Cleveland-Akron combined statistical area) has 3.7 million people and a $220 billion economy. It is the largest region in Ohio, the third largest in the Midwest, and in the top 20 in the U.S. 

The area has over 110,000 college students and sees $3.7 billion in annual research. Medicine is one of the city’s leading employers through research, biotech, med tech, and healthcare, spearheaded by the Cleveland Clinic. Other industries include advanced manufacturing, law, aerospace, banking, insurance, technology, education, and polymers and materials. 

The metro median list price is a very affordable $227,000, up 8.4% annually. That price will buy you a fully renovated three-bedroom, 2.5-bathroom, 1,628-square-foot house with a two-car garage. 

Rents have risen dramatically in recent years—increasing 6.5% between March 2023 and 2024 in the Greater Cleveland area and 9.4% in the metro area for single-family homes in the same period, meaning rent has outstripped inflation. According to RentCafe data, 59% of households rent in Cleveland, making it another prime rental market. 

Final Thoughts

The four remaining markets have one thing in common: They are formerly depressed industrial cities that successfully reinvented themselves through tech, medicine, finance, energy, and food and beverage. They are all relatively small cities with a decades-long history of low-priced homes. 

Government incentives and investment have transformed these cities. The 2022 CHIPS Act sees around $280 billion poured into the U.S. economy through grants, tax breaks, and research incentives to bring essential technologies such as semiconductors to U.S. soil. Many of the beneficiaries of this money are located in the Midwest, in small cities that have the land to create technology parks. 

“One advantage of having big companies return to the Midwest is that it helps take seriously some of the crises around geopolitical tensions, climate change, or potential disruption to our supply chains,” Brookings Institution fellow Annelies Goger told The Guardian. “It would help us have more capacity domestically to overcome those types of shocks in the future.”

The Midwest has been regenerating into tech towns for the best part of a decade. Indeed, 18,000 start-ups, backed by venture capital and talent, have landed in the region, settling into the heartland, sparking a population increase for the first time in years.

The lesson for real estate investors is to follow the tech and med dollars—see where labs and fabs are being built and where future-proof businesses are sprouting. When this coincides with former down-on-their-heels industrial cities, you’ll likely meet a perfect storm for investing: low housing costs, good local infrastructure backed by universities and hospitals, and large-scale stimulus packages attracting new residents.

Get the Best Loan Today

Find trusted, investor-friendly lenders who specialize in your strategy.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.