The Most Undervalued Housing Markets in the U.S. 

Undervalued real estate markets always offer investors a chance to find low-priced properties. Once they invest in such properties, they can earn a high return.  

However, this comes with challenges you may encounter once you invest in the undervalued housing market.  

Thus, it becomes important to conduct thorough research about the local market and talk to the local people. You can also seek help from real estate agents.  

The agents will guide you about the current pricing and what strategy might cause you a major benefit in terms of a high return on the investment.      

Remember, a properly undervalued home can offer you areas with a better job market, various cultural opportunities, and other amenities. You can say it is one efficient way to have a better life.  

If you are an investor for the first time, I suggest you keep an eye on inflation and mortgage rates while looking for housing options.  

In this article, I will guide you through the top 5 most undervalued real estate markets in the US. I will fill you in on every detail, so you don’t have to do further research into it.    

What Does The Term Undervalued Mean? 

The term Undervalued is used in financing and investment. When a specific asset, for example, a stock or security, is considered undervalued, it refers to the market price that is lesser than what has been assumed to be an intrinsic value. 

Buying an undervalued stock or asset can be profitable enough. An individual can exploit the gap between the intrinsic and market values.  

According to a general rule from the Department of Housing and Urban Development, these days, households must spend 30% of their gross income on a place to live.  

This is also termed “cost-burdened,” where the burden has become more important than what US citizens spend on necessities. These necessities include food, transportation, clothing, and health insurance.   

US citizens are going through such a time due to inflation in the present economy.  

In this article, I will list the undervalued housing markets based on the local per capita income instead of household income.  

The overvalued and undervalued housing market mainly refers to how much the households pay, which can be more or less for their housing costs. These are compared with the national per capita income.         

Impact of covid on housing prices in the US 

At the beginning of the pandemic, the uncertainty in the economy initially obstructed housing sales and new construction. However, as time passed, home values started to pick up.  

The National Association of Realtors has recently presented that the median home price has rapidly increased in the US.  

The median price for a home was $280,700 in March. This figure suddenly increased to $406,700 in July.  

Low-interest rates, families and their quarantine period, and a poor supply chain worsened the situation. All the issues had a deep impact on the current housing market.  

The recent US housing market and its price 

As I have discussed earlier, the pandemic greatly changed the US real estate market. In the beginning, the pandemic led to slow housing throughout the nation. Many citizens were not ready to sell their properties, and people stayed home due to the quarantine.  

Apart from that, the interest rates also increased, causing a huge rate on mortgages. 

However, as the pandemic ended, the housing market began normalizing. Interest rates dropped, sales picked up, and the market quickly recovered. 

Amid the market recovery, housing prices remained high. Even though there was a decline, the process was slow.   

However, the basic perk is that the undervalued housing market provides opportunities and a great deal to those trying to invest in housing.  

Considering the advantages, such as better economic development, job opportunities, population growth, and better infrastructure, the undervalued housing market can benefit you if you are still looking for better investment opportunities.   

Here are the top 5 most undervalued housing markets in the US:  

5. Philadelphia, PA 

Philadelphia, located in Pennsylvania, provides wonderful real estate offers to investors and home buyers.  

This city is in the most undervalued real estate market, making it a better place to live and get high return value.  

The market condition has been extremely low recently, making it suitable for investors to make real estate investments.  

Philadelphia currently has a median payment-to-income percentage of 22.3%, which is over 14% below the national average. So, yes, Philadelphia is affordable enough for you to invest in real estate.  

People prefer to settle in this city because of its rich culture, history, and art.   

However, it is important to know that Philadelphia lacks housing inventory. However, the demand remains the same. As per the April 2023 report, the median house value in Philadelphia was around $263000.  

This shows a drop of 4.4%  for the house prices, making it available to live in.  

4. San Fransico, CA 

This beautiful city comes under the median housing payment-to-income ratio of 28.6%. The area is already famous for its pleasant weather and attractive surroundings.  

Moreover, the land also has affordable housing options for you to invest in. The home values at San Franciso are becoming cheaper due to the adjusted real estate market in the US.  

Among all the most undervalued real estate markets, San Francisco’s median price-to-pay has decreased by 2%, and the housing market expects a decline by the rest of the year.  

So, if you plan to settle in San Francisco, this is the right time to buy a property in one of the most undervalued housing markets in the US.   

3. Detroit, Michigan   

The median payment-to-income ratio is around 17.4% in Detroit, Michigan, making it less than the US’s 37% of the national average. This city, Detroit, can easily be counted as one of the most undervalued real estate markets in the US.  

The city has bloomed through new investments and a growing number of companies. This is boosting the real estate market in Detroit, making it an affordable place to stay.  

Given the current median house value of $75000, it can be said that the house price has declined by 6.3%.  

The houses generally sell for 5% of the listing price despite the competition among the buyers. This indicates that the place is offering housing at a very good rate. 

With 182 neighborhoods, Detroit is still considered a buyer market where buyers have a wider range of options. The city also has excess inventory, making it easy for buyers to bargain on homes.  

This also creates a huge opportunity for the sellers to get a good price. So yes, Detroit is among the US’s most undervalued real estate markets.  

2. Rochester, NewYork  

Rochester is still considered one of the US’s most undervalued real estate markets. This clearly depicts that the market price is currently very high, and housing is being sold quickly.   

Despite having a high market price and fast-selling housing, Rochester still remains one of the most affordable places to live in and falls under the list of most undervalued real estate markets in the US.  

The area is already famous for its rich culture, arts, and scenic can attract more people. Being titled as the “Culture capital of Upstate New York” is still under the national median housing value.  

In this area, the average home is sold for $257,000, keeping it affordable for the population.  

1. Cleveland, OH 

Cleveland, Ohio, still falls below 37% of the national average median, including how much a person spends on a home.  

The homeowners in this city usually spend about 25.2% of their total income almost every month. Due to the undervalued housing market, Cleveland is rated as the most undervalued real estate market in the US for 2023.  

Cleveland has various amenities that do not cost much like the other metropolitan areas. Besides, there is no shortage of homes in this specific market.  

Along with the affordable housing price range, Cleveland has also become a real estate market that easily falls under the most undervalued real estate markets, offering many affordable houses to the population.  

For the last 11 years, Cleveland has been an affordable market. The cost of living is about 11% less than the national average rate. While offering a great lifestyle and place to live, Cleveland also attracts potential buyers with great deals and a profitable economic climate.          

In Summary  

These most undervalued housing markets in the US have the potential to offer better opportunities for both buyers and investors.  

Remember, undervalued housing can always be found with a great job market, economic climate, and other amenities. These factors make the places more attractive to live in.  

If you are still wondering where you can buy affordable housing, exploring these most undervalued real estate markets might help you with your next move.