Buying a home is an oversized ticket item for all homebuyers. Even when buying in areas where the houses cost less, it is never a cheap excise, as there are too many zeros in the price no matter where you choose to live.
House prices are slowly recovering in some locations, even though 2023 is expected to favor homebuyers. Following year sellers everywhere will be more optimistic. Of course, homes at the top end of the market don’t necessarily follow the usual price trends.
That dream home in Hawaii – how much it costs today or next year is still a lot more than most people can afford.
This PropertyTalk blog looks at the five most expensive states for buying a home in 2023. Then we return to earth with the most affordable cities for buying a home in 2023.
Most Expensive States
Can you guess the top five states for luxury homes? Let’s take a look.
The most expensive states for buying a home include:
Hawaii tops the list of most expensive states to buy property. The average home price in Hawaii is around $696,000 to $730,000, against an average yearly salary of $81,000. To get an idea of how high those prices can go, one of the most expensive homes on the islands will cost you about $45 million.
Why is real estate in Hawaii so expensive? Historically, it’s been one of the most expensive places in the United States. A boom in population post-WWII led to a thriving tourist industry, which has driven up the prices of both property and the cost of living. Another main reason is simple supply and demand: there’s only so much space in Hawaii and little room for expansion.
There are a few things that ease the blow of Hawaii’s high cost of living — for one thing, Hawaii’s property taxes are the lowest in the country, and even the best Hawaii homeowners insurance costs are well below the average — only about $37 per month, according to numbers from Ross Martin at The Zebra.
Zillow says California doesn’t rate far behind Hawaii in buying a home: the median price is $728,134.
While not every city in California is prohibitively costly to live in, places like Los Angeles and San Francisco drive that average up, and there’s usually a high cost of living to go along with it.
As with Hawaii, land in California is in high demand and short supply, with everyone from private homeowners to big tech companies vying for a piece of the pie.
After Hawaii and California, the median price for a home drops precipitously: in Oregon, for example, the average home goes for a “mere” $474,360.
House prices in Oregon are high because the state government closely controls its land and doesn’t allow development unless necessary.
With few new homes being built in Oregon, it’s a seller’s market, which further drives up demand. Oregon also has some of the highest income taxes in the nation, which drives up the price of living further.
Things are similarly expensive in Washington, where the average home price is $562,939. This is the average for the state and goes up considerably when you focus on the big cities like Seattle, where homes regularly cost $900,000 and up to buy.
Why is real estate in Washington so expensive? One main culprit is zoning laws. Most local zoning laws forbid building anything but detached houses with yards and driveways. These structures take up much real estate, limiting the number of homes that can be made in a zoned residential area, bringing us back to the supply-and-demand issue.
A typical home in Colorado will cost you about $539640. Surprisingly, big cities like Denver don’t seem to cost a disproportionate amount by comparison; the median sale price there is about $527,500. Nonetheless, the price for a home in Colorado is significantly higher than most of the rest of the country. One primary reason is that it’s a state with a big business focus.
Colorado tends to have looser business regulations, attracting major corporations like Catnip. This, in turn, makes for a healthy job market, which means more and more people are looking to move to Colorado in 2023. The beautiful scenery and outdoor life don’t exactly hurt, either.
The Least Expensive States to Own a Home
So now that we’ve looked at the most expensive places to live in the US, where are the cheapest places?
According to Homebuyer.com, the most affordable homes are in the following five cities:
- Macon, GA
- Detroit, MI
- Gary, IN
- Flint, MI
- Toledo, OH
Average home sales and median sales prices indicate how the market performs for homebuyers and sellers.
Median House Prices
Median house prices are a good indicator of property values, and the state with the lowest median house price is Iowa, at $200,038.
Indiana, Ohio, Nebraska, and Kansas are comparable to Iowa’s housing prices. It’s probably not hard to guess why real estate is so cheap here. Most of these states have the opposite situation of places like California and Hawaii. For example, there is much available land and room to create new residential areas to build homes.
Plus, fewer people are in the states mentioned here, which presents opportunities for homebuyers and challenges for career moves. If you can find work or set up your enterprise, you can find a cheap home in these states.
We have presented the top five if you want to live in one of the most expensive states.
For first homebuyers and families seeking more space and affordability, consider states like Macon, Indiana, and Detroit for your next home purchase.
While they might not have all the opportunities of denser areas and larger cities,