The gap between the nation’s most expensive housing markets and its most affordable regions is widening. According to the National Association of Realtors, the average home price in Silicon Valley is set to surpass $2 million in the second quarter of 2024. This figure is even larger when compared to the nation’s cheapest market, Decatur, Illinois, where the average sales price is just $126,700. In other words, buying a home in San Jose, California, will cost you about 16 times more than buying a home in Decatur.
Given that difference, why don’t more Americans move to cheaper areas?
In fact, some people think so: In late 2020, video game designer Tyler Jaggers gave up his dream of buying a home in San Jose and moved to Topeka, Kansas, where he bought a home in need of repairs for less than $50,000.
Although the move meant leaving relatives behind in California, Jaggers called the move a “no-brainer” and said he doesn’t regret it.
But the reality is, many Americans are willing to live in a pricey housing market, even if they have to make sacrifices. Dina Corino bought her first home, a small condo in Los Angeles, in early 2024. She had to scour various down payment assistance programs to get there, but it was a long journey that ultimately paid off.
Huge disparities in home prices across the country
According to the National Association of Realtors, the median home price in California’s most expensive areas will exceed $2 million in the second quarter of 2024. In other coastal areas, such as San Diego, the typical home price is over $1 million, but there are also many smaller cities, mainly in the Midwest, where home prices are under $200,000.
The five most expensive metro areas, based on the median price of existing single-family homes sold in the second quarter of 2024, are:
- San Jose/Sunnyvale/Santa Clara, California: $2,008,000
San Francisco-Oakland-Hayward: $1,449,000
Anaheim/Santa Ana/Irvine, California: $1,437,500
- Honolulu: $1,101,500
- San Diego: $1,050,000
At the other end of the affordability scale, the five most affordable markets are:
- Decatur, Illinois: $126,700
- Elmira, New York: $150,600
- Cumberland, Maryland: $152,800
- Youngstown, Ohio: $164,700
- Peoria, Illinois: $168,500
How moving to Kansas made home buying possible for one homeowner
When the pandemic hit, Jaggers decided he had had enough of Silicon Valley and its shockingly high cost of living: His income was too low to qualify for a mortgage in the country’s most expensive housing market, and remote work meant he no longer had the career advantages of living in Silicon Valley.
Looking for a cheaper place to live, Jaggers turned his attention to Topeka. He learned about the area’s affordable housing costs and about Choose Topeka, a program that offers remote workers up to $15,000 to move to the city and buy a home. (At the time Jaggers moved, the incentive was $10,000.)
Jaggers applied for the program and was quickly accepted. He bought his home for just $47,000 and received a $10,000 grant soon after moving in, which he used to repair the roof.
Four years after the move, Jaggers said he’s happy with his decision.
“You can own property without taking out a big mortgage,” he says. “In California, you wouldn’t even be able to get a mortgage.”
Kansas’ low cost of living and the steady income that comes with working remotely have put Jaggers in a good financial position — he’s already paid off the loans on his house and the new Subaru he took out soon after moving to Kansas.
Though he now owns a place to call home, Jaggers admits he misses his family and California’s mild climate, but he says the financial gains from moving to a more affordable area have been a big reward.
“Moving to a place where you don’t know anyone can be a little scary for some people,” he says, “but I’ve already made a lot of friends.”
How California’s first-time buyers can succeed in a more expensive market
Corino, who was born in California, also tried to move to a cheaper area and even took a job in Texas for a while, but the hospital medical assistant ultimately decided she was ready to make the sacrifices necessary to stay in her home state.
“I’m from California,” Corino said, “my whole family is here. The weather is great.”
Corino was renting and her sister encouraged her to become a homeowner, but achieving that goal meant making lifestyle changes like paying off debt, improving her credit score and creating a budget for the first time.
“I spent every penny I made” before looking to buy a home, Corino said.
It took more than a year to get her finances in order, a journey that made her want to quit many times, but she persisted. Then, when Corino began her house hunt, she had no choice but to temper her expectations.
“I wanted a house. I never even considered a condo,” Corino said, “but California is so expensive.”
So Corino decided to buy a condo. As a first-time buyer with little income, she qualified for down payment assistance, which was crucial. She got a Ladder Up Home Loan Grant from City National Bank. The program allows buyers to use funds toward a down payment, closing costs or a lower interest rate on their mortgage. Plus, no mortgage insurance is required, regardless of the down payment amount.
Corino also secured a $151,000 interest-free loan from the City of Los Angeles.
Nearly six months after moving into her apartment, Corino is happy with her decision. “It’s a dream come true,” she says. She’s happy with the shorter commute and the financial stability she now enjoys.
But she can’t escape the realities of California’s expensive housing market. One of those realities? “My closet is very small,” Corino says.
Why don’t more buyers move to cheaper markets?
The coronavirus pandemic has sparked migration due to soaring home prices, with California and Seattle homeowners moving to Arizona, Nevada, Utah and Idaho, while Northeast residents flock to Florida, Georgia and South Carolina.
But now the housing market appears to be back on its pre-pandemic trajectory, with coastal home prices soaring while suburban prices remain modest.
Before the pandemic, home prices were soaring in areas like Silicon Valley and Seattle because of the concentration of high-paying jobs there, and remote work has allowed homebuyers to use their big-city salaries to move into more affordable housing markets.
But many employers are asking employees to return to the office: Amazon said this month that it would require employees to work in the office five days a week starting in January, and other major employers are similarly winding down their virtual work programs, meaning real estate prices in tech hubs are skyrocketing.
“The Midwest is certainly cheaper, but the job market may not be there,” said Lawrence Yun, chief economist for the National Association of Realtors. “Obviously, they’re seeing 100% remote work, but there’s uncertainty.”
Darryl Fairweather, chief economist at real estate brokerage Redfin, also sees a return to pre-pandemic trends in both office work and home price growth. In the Midwest, “the job market has not yet recovered, and the weather is making it worse,” he said.
