That location matters when it comes to real estate may be even more true today after years of home price appreciation following the Great Recession.
Not every city has rebounded at the same rate, and some have become unaffordable for middle-class workers in recent years. Add on other financial obligations such as property taxes and maintenance costs, and many Americans are wondering if it still makes sense to take the jump into homeownership.
Owning a home is especially challenging for people living in coastal cities, a new survey from Bankrate.com found. Many of these cities have become increasingly expensive while also facing high property insurance rates and, in the Northeast, stiff heating costs.
Still, even in expensive cities, workers may decide it's worth buying property if they want to lock in a price and insulate themselves from future rent hikes. Others may decide it's better to move to a less expensive suburb or relocate to another city.
"In a lot of cities, the ability to build new housing isn't keeping up with demand," said Bankrate analyst Claes Bell. "It's fair to say that many cities are reaching a point where housing just isn't affordable for people who live and work there."
Some of the best cities for homeowners are those that were hard hit by the housing decline, Bell said. While they've recovered from their lows, some of these markets still offer affordable values for buyers.
The study examined homeownership based on eight factors:
- home affordability
- price appreciation
- property taxes
- homeowners' insurance rates
- energy costs
- maintenance costs
- how rapidly rents rose over the past six years for which data are available
Read on to learn about the five best and five worst cities for homeowners.
Best: 5, Minneapolis-St. Paul
The Minneapolis-St. Paul metropolitan area offers the fifth-best location for homeownership among the country's 50 biggest cities, the Bankrate study found.
The median home value in Minneapolis is $218,900, according to Zillow, which is predicting home prices there will rise 2.9 percent in the next year. The Atlantic has heralded Minneapolis as a city that "mixes affordability, opportunity, and wealth."
Best: 4, Las Vegas
The Las Vegas-Henderson, Nevada, metropolitan area was hard-hit by the housing crisis, but the market there is rebounding. The Las Vegas Sun proclaims that it's "rising from the grave." Even with that rebound, affordability remains in the middle of the pack, according to Bankrate's analysis.
The median home value in Las Vegas stands at $198,700 and is expected to rise 5.4 percent in the next year, according to Zillow.
Best: 3, Atlanta
The Atlanta-Sandy Springs-Roswell, Georgia, metropolitan area scored as the third-best region for homeowners.
The median home price in Atlanta is $192,900, with expected appreciation of 5.4 percent during the next year, according to Zillow.
Best: 2, Phoenix
The Phoenix-Mesa-Scottsdale, Arizona, metropolitan region is another city that was hard hit during the housing crisis, but now it holds the promise of providing a sound financial footing for homeowners.
Home price appreciation has been on the rise, although the area remains relatively affordable. The median home value now stands at $194,200, and prices are expected to rise 3.2 percent in the next year, according to Zillow.
Best: 1, Portland, Oregon
The Portland metropolitan area may get spoofed for its "Keep Portland Weird" culture, but it's a seriously good location for homeowners, according to Bankrate, which ranked it tops among the 50 largest U.S. metropolitan areas.
The city was helped by inexpensive homeowner's insurance, few foreclosures and low energy costs. Within the city of Portland, however, homes may be on the pricey end. Zillow finds that the median home value stands at $384,600, with an expected price appreciation of 7 percent within the next year.
Worst: 5, Buffalo, New York
The Buffalo-Cheektowaga-Niagara Falls, New York, region isn't favorable for homeowners, the Bankrate study found. The area may be more affordable than other Northeastern cities, but it ranks low on home price appreciation.
The median sale price for homes in Buffalo stands at about $70,000, according to Trulia. That's far below the U.S. median sale price of about $295,000.
Worst: 4, Los Angeles
The Los Angeles metropolitan region is the sole West Coast city to land in the worst 5 cities for homeowners. The reason? Poor affordability and higher property taxes.
The median home value for Los Angeles is $583,500, far above the roughly $295,000 U.S. median sale price.
Worst: 3, Providence, Rhode Island
The Providence, Rhode Island, metropolitan region ranks as the third-worst for homeowners due to high insurance costs, low affordability and lackluster price appreciation.
The median home value in Providence is $160,900, with prices expected to rise 2.9 percent in the next year, according to Zillow.
Worst: 2, New York City
The New York City metropolitan area ranks as the second-worst for homeowners, according to Bankrate. The region was dinged for high property taxes, minimal home-price appreciation and expensive maintenance costs.
The median home value in New York City is a lofty $586,900, and prices are expected to rise 6.4 percent in the next year, according to Zillow.
Worst: 1, Hartford, Connecticut
The worst location for U.S. homeowners is the Hartford-West Hartford-East Hartford, Connection, region due to above-average property taxes, energy costs, homeowners' insurance and maintenance fees, Bankrate said.
The median home value in Hartford is $99,500, according to Zillow. It's expected to rise just 0.8 percent in the next year.