Whether you're flipping a house, renting it out, or turning it into an Airbnb, your profits will be heavily determined by the price you pay for the property. Get the house cheap, and there's lots of room to build and see returns. Pay too much? Well... let's not go there. Unfortunately, home prices are rising across the nation, and competition for limited inventory is stiff. That makes it harder for investors to find great deals -- but not impossible.
Are you on the hunt for your next investment property? Don't want to overpay? Here are the five cheapest cities to buy a house right now.
According to the latest forecast from CoreLogic (NYSE: CLGX), there's an "over 70%" chance home prices drop in Vegas over the next year. The projected decline? A whopping 5.6%. That's ideal for investors looking for an affordable place to buy and hold: Get in while prices are declining, rent it out until the city's tourism industry bounces back, then sell when the median home value rises accordingly down the line.
Another positive indicator? Mortgage delinquencies are high in the area. About 9.3% of all mortgage loans were at least 30 days delinquent in July, and 6.4% were what's called seriously delinquent -- 90 days overdue. That last number is up from a mere 1.3% share the year before.
Though the FHFA foreclosure moratorium may prevent some of these delinquent properties from hitting the market immediately, that measure is set to expire at the end of December.
Additionally, the moratorium only protects those with federally backed loans, leaving about 30% of those homes still eligible even today. That could mean a wave of low-cost properties coming to market very soon (especially if the city's tourism industry doesn't see its usual holiday boom).
Another big city where foreclosures might soon come in waves? That'd be Miami, where over 12% of homeowners are delinquent and 8.4% are at least 90 days late on their payments. The current foreclosure rate is at 0.6%, but since the state has no proprietary foreclosure moratoriums in place (just the FHFA one), those numbers could be rising very soon.
CoreLogic also predicts an over 70% chance of price declines in the area, too, making it a good place to invest in longer-term rental or vacation real estate. Just keep in mind proximity to local hotspots and tourism favorites (i.e., the beach) if you're going the latter route.
Space City is seeing rising delinquency rates as well. Nearly 6% of all homeowners in Houston are at least 90 days late on their mortgage payments, and there are no in-state moratoriums to prevent nonfederal borrowers from facing foreclosure.
This could indicate a wave of auctionable properties on the horizon -- especially given how hard the city's oil and gas industry has been hit during the pandemic. (Over 100,000 jobs have been lost so far).
On top of this, CoreLogic projects a 2.1% decline in area home prices by September of next year. The current average price in Houston is just $196,902 -- well below the national average of $223,970, so even more affordable housing prices are on the horizon.
Keep in mind you don't have to stick to the city proper. With more people working from home these days, venturing out to the metro area's suburbs or more rural parts of Houston may actually be a better bet.