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With home prices rapidly tumbling and the vacancy rates soaring in many towns, median-priced homes are equivalent to the cost of new American cars, only slightly more risky. This is definitely a bit troubling when the American dream is all about homeownership for many Americans.
So, which do you choose if you can only afford to buy the house or the car? For some, renting has become the answer since it comes without risk of facing foreclosure. With a car though it is unlikely to increase in value, but at least the depreciation is more manageable as well as predictable, unlike owning a home.
Towns such as Detroit or Youngstown, Ohio are high-risk areas and have helped depress housing prices. There’s no chance of a strong recovery in housing either until the employment makes a big improvement. “Towns with a history of job losses probably won’t see big price gains, especially if they have high vacancy rates, because it means buyers have a lot of homes to choose from,” says Jed Kolk, chief economist and head of analytics at real estate site Trulia.
Many residents come from depressed cities in Michigan, Florida, Indiana, and Ohio. In these areas, the amount of job losses on top of plummeting housing prices, have made it very difficult for recovery in these areas. On the up side though, these towns at least offer a low cost of living according to American standards. Ideal for those willing to deal with it, homeownership in these areas could hopefully be worth it in the future.
Since home prices are at 30-year lows and mortgage rates are at record-lows, it’s assumable that residents in troubled cities will be far more tempted to take the plunge and buy a home. Yet, there is still the allure of plopping down a small deposit and buying a car that can take you to a more prosperous city that offers better housing markets and stronger job prospects.
Cheapest Homes List
1. Detroit, Mi
>Median listing price: $21,000
>Comparably priced car: Chevy Malibu ($21,000)
>Housing price change (year over year): 5.2%
>Median household income: $29,447
>Unemployment: 9.9%
2. Flint, Mi
>Median listing price: $31,950
>Comparably priced car: Chrysler 300 ($31,950)
>Housing price change (year over year): n/a
>Median household income: $28,835
>Unemployment: 8.9%
For more information on this study visit: Cities where Homes Cost Less than a Car
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