Here’s America’s Most Affordable Cities According To Arch Mortgage Insurance Company

Here’s America’s most affordable cities according to Arch Mortgage Insurance Company. Arch recently crunched the numbers on the five most affordable cities LINK in the country.  The results in The Housing and Mortgage Market Review (HaMMR) may surprise you.

Included in Arch’s top five cities are Indianapolis, IN, Atlanta, GA, Raleigh, NC, Columbus, OH, and Nashville, TN. Let’s look at how affordable for homebuyers these cities are. According to Arch’s research, Indianapolis’ median home value was $235,515. Moving onto Atlanta where prices are rising the median home value there was $257,980. Raleigh holds the number three spot at $322,723. Columbus Ohio comes in at 345,636. Nashville’s median home value hit $310,576.

I asked SVP and Global Head of Analytics at Arch Capital Services Rob Hardie for insights into the report.

EP: Were there any surprises on the list?

RH: Absolutely. First of all, just seeing a number of these larger cities where the affordability has still remained below the national average despite strong economic conditions was a surprise in itself.

In our analysis, we wanted to hone in on cities with strong employment growth. An affordable house in a metro with poor job growth isn’t very helpful! Secondly, while we have heard chatter of the likes of Raleigh and Nashville as upcoming tech hubs or boomtowns in the same way as say a Denver or Austin, it was a surprise to see them on this list. For example, Raleigh stood out to us because of its booming tech hub and proximity to major research universities. 

EP: What are your thoughts behind the fundamentals in each market?

RH: The fundamentals of each city on the list are extremely important. How strong is the employment growth, is the employment across diverse sectors, is there an increase in tech companies moving there, how is the population growth? All of these factors were accounted for when evaluating the most affordable cities.  

EP: How do you see COVID impacting affordability in these cities?

RH: I believe 2020 taught us that none of us can predict the future. However, each of these cities, like most of the US, saw very strong year-over-year home price growth leading into Q3 2020, which was used as the basis of our affordability calculations. Each city saw at least a 10 percent increase in median home prices. As such, I would say that these cities have remained affordable despite the increase in demand for housing we have seen as a result of COVID.

EP: What are the takeaways for buyers considering these cities?

RH: If you’ve been juggling working from home in a cramped city apartment and looking to buy, now is a great time as interest rates remain historically low. As there has naturally been some caution around, and an inability to spend during the pandemic, US household savings rates in November 2020 were 50 percent higher than they were in February 2020, which also will help with new homeowners looking to make their down payment. These are great cities to consider buying a home in because in addition to being affordable they also have strong job growth. Each of these cities has an employment rate in the top 50 percent of U.S metros. To account for the impact of the pandemic we used Q4 2019 job data.

 Watch here for Arch’s next Housing and Mortgage Market Review.