Yahoo Finance Real Estate 2023: More Retirees Can Afford To Buy Homes in These Cities
Some retirees crave a new adventure -- a change of scenery once a job no longer keeps them tied to one region or city. And if it's a new city they seek at a price that won't eat up their retirement savings or income, they have some choices.
To give you an idea of where you could settle in retirement without becoming house poor, GOBankingRates looked at where you can buy a house and not pay more than $1,383 per month on a mortgage. That figure represents 30% of the annual income of the typical person aged 65 or older -- the amount experts say should cap your spending on housing.
In all, 26 cities came in with a monthly mortgage payment of less than $1,383, with the lowest 15 listed here. If you are thinking of heading south -- or retiring in Ohio -- this collection of cities is ideal for you.
Social Security: Is the $16,728 Yearly Bonus Real?
Also: What To Do If You Owe Back Taxes to the IRS
Fayetteville, North Carolina
June 2023 home value: $200,437
20% down payment: $40,087
Primary loan amount: $160,350
Average property tax rate: 0.84%
Monthly mortgage payment: $1,203
Fayetteville is one of just two cities in the top 15 with a June 2023 home value exceeding $200,000. The average monthly mortgage payment of $1,203 makes it cheaper to buy than rent in Fayetteville, where the average rent is $1,400, according to Zillow Rental Manager.
First Year of Retirement: 7 Money Moves You Absolutely Must Make
Also: 4 Social Security Shakeups from Biden That Could Hit Your Wallet by 2024
Brownsville, Texas
June 2023 home value: $175,620
20% down payment: $35,124
Primary loan amount: $140,496
Average property tax rate: 1.80%
Monthly mortgage payment: $1,194
Texas has one of the highest property tax rates in the nation, ranking No. 46. Texans don't pay any state income tax, however, helping to compensate for what they pay in taxes on their homes.
Read: This Secret IRS Loophole Lets You Reduce Your Retirement Taxes
Little Rock, Arkansas
June 2023 home value: $201,437
20% down payment: $40,287
Primary loan amount: $161,150
Average property tax rate: 0.62%
Monthly mortgage payment: $1,172
Arkansas' capital city is the second -- and final -- location on the list with a home value of more than $200,000. Its average property tax rate is the 12th-lowest in the nation, however, making home ownership more affordable there for retirees.
Syracuse, New York
June 2023 home value: $171,047
20% down payment: $34,209
Primary loan amount: $136,838
Average property tax rate: 1.72%
Monthly mortgage payment: $1,152
New York lives up to its high-tax reputation when it comes to property taxes, with the seventh-highest rate in the nation. That could be why Syracuse is the only New York city represented on the list.
Baltimore, Maryland
June 2023 home value: $181,416
20% down payment: $36,283
Primary loan amount: $145,133
Average property tax rate: 1.09%
Monthly mortgage payment: $1,126
Retirees will save significant money each month if they buy a home rather than rent in Baltimore, where the median rent is $1,500, according to Zillow Rental Manager statistics. At the end of a year, that's a savings of nearly $4,500.
Social Security Cuts: These States Would Be Impacted the Least
Mobile, Alabama
June 2023 home value: $185,978
20% down payment: $37,196
Primary loan amount: $148,783
Average property tax rate: 0.41%
Monthly mortgage payment: $1,049
Mobile is the first of three Alabama cities to appear in the GOBankingRates study, and the state's average property tax rate contributes to that. Only one U.S. state has a lower tax rate, and that's Hawaii, surprisingly.
Saint Louis, Missouri
June 2023 home value: $167,807
20% down payment: $33,561
Primary loan amount: $134,245
Average property tax rate: 0.97%
Monthly mortgage payment: $1,025
St. Louis, which has nearly 300,000 residents, is the last city in the study where retirees can expect to pay more than $1,000 a month in mortgage payments.
Memphis, Tennessee
June 2023 home value: $148,427
20% down payment: $29,685
Primary loan amount: $118,742
Average property tax rate: 0.71%
Monthly mortgage payment: $875
With about 621,000 residents, Memphis is the largest city in the study and likely has a variety of housing options for retirees. Tennessee is another of the states that doesn't have a personal income tax, allowing retirees to keep more of their pension checks.
Social Security 2023: Recent Study Shows Quarter of Americans Underestimate Their Benefits By $5,000
Montgomery, Alabama
June 2023 home value: $138,200
20% down payment: $27,640
Primary loan amount: $110,560
Average property tax rate: 0.41%
Monthly mortgage payment: $780
The average cost of a home in Montgomery costs about $50,000 less than homes in Mobile, which lies about 170 miles to the southwest on the Gulf Coast. But if you want to retire in Alabama, its capital city isn't the lowest-priced state location in the GOBankingRates study.
Akron, Ohio
June 2023 home value: $114,867
20% down payment: $22,973
Primary loan amount: $91,894
Average property tax rate: 1.56%
Monthly mortgage payment: $758
Akron is the first of four consecutive cities in Ohio to appear in the GOBankingRates study, and the monthly mortgage payment is separated by less than $100 among the four. For retirees seeking to buy a home in Ohio, their choice, then, could depend on other factors, such as local amenities or proximity to family, friends or senior services.
Toledo, Ohio
June 2023 home value: $111,305
20% down payment: $22,261
Primary loan amount: $89,044
Average property tax rate: 1.56%
Monthly mortgage payment: $735
Toledo is about two hours west of Cleveland along Interstate 90 and is just south of the border with Michigan. The two states -- Ohio and Michigan -- have a nearly identical property tax rate.
See: I Lost $400K of My Retirement Savings in a Roth 401(k) -- If You're Not Careful, You Could, Too
Dayton, Ohio
June 2023 home value: $110,152
20% down payment: $22,030
Primary loan amount: $88,121
Average property tax rate: 1.56%
Monthly mortgage payment: $727
Dayton is the only one of the four Ohio cities in the study in the southern half of the state, about 150 miles south of Toledo. Cost-wise, however, the two are nearly identical, with the average monthly mortgage payment separated by just $8, making either city viable for retirees.
Cleveland, Ohio
June 2023 home value: $101,135
20% down payment: $20,227
Primary loan amount: $80,908
Average property tax rate: 1.56%
Monthly mortgage payment: $668
Weather is another factor that retirees consider when choosing where to live. And if you don't like shoveling snow, another Ohio city might prove a better choice. According to the National Weather Service, Cleveland averages 63.8 inches of snow annually, while 37.4 inches fall in Dayton.
Birmingham, Alabama
June 2023 home value: $99,433
20% down payment: $19,887
Primary loan amount: $79,546
Average property tax rate: 0.41%
Monthly mortgage payment: $561
Alabama retirees will see their money go the farthest in Birmingham, one of just two cities on the list where the home value is less than $100,000. Its monthly mortgage payment of $561 is far lower than the averages in the other Alabama cities, Mobile ($1,049) and Montgomery ($780).
Read more: 10 Safest Places To Retire in Asia for Less Than $2K a Month
Detroit, Michigan
June 2023 home value: $63,661
20% down payment: $12,732
Primary loan amount: $50,929
Average property tax rate: 1.54%
Monthly mortgage payment: $419
Detroit tops the list of affordability for retirees, with the average mortgage payment just $419 per month -- just about $5,030 for a full year. Although the property tax rate is on the higher side of the list, the low mortgage payments might just make up for that.
Methodology: For this piece, GOBankingRates calculated how much a typical person 65 or older should spend on a mortgage using the rule that no more than 30% of their pre-tax income should go toward housing. With that in mind, GOBankingRates found the typical person 65 or older has an annual income of $55,335, sourced from the 2021 Bureau of Labor Statistics Consumer Expenditure survey. This figure then was multiplied by 0.3 to give us an annual limit of $16,601, or $1,383 per month to spend on a mortgage. GOBankingRates then looked at the home values for the 150 largest housing markets, according to Zillow's June 2023 data. GOBankingRates took each city's June 2023 home value and found the monthly mortgage payments using the following assumptions: a 20% down payment; a 30-year fixed rate mortgage of 6.96%, as sourced from St. Louis Federal Reserve; average state property taxes, as sourced from the Tax Foundation; and the condition that no PMI or HOA dues are included. The 26 cities that had a monthly mortgage payment under $1,383 were included in final rankings, with the lowest 15 listed here. All data was collected and is up to date as of July 13, 2023.
More From GOBankingRates
Driver's License Scam Could Cost You Thousands: 13 Ways To Protect Yourself
5 Best Ways To Stay Safer From Identity Theft When You're Online
This article originally appeared on GOBankingRates.com: Real Estate 2023: More Retirees Can Afford To Buy Homes in These Cities
