The decision to purchase a home is a significant financial commitment that requires careful consideration of various factors, including housing prices, job growth, crime rates, and population trends. While some American cities offer excellent opportunities for homeownership, others may not be the best option for potential buyers.
In this article we will highlight the cities to avoid buying a house in 2023 based on these factors, providing insights into their housing markets, job markets, crime rates, and population trends to help readers make informed decisions.
San Jose, California
Some of the most expensive cities to purchase a home are in California, and San Jose ranks as one of the worst, especially for first time homebuyers. The cost of homes is high and the supply is low.
In the fourth quarter of 2022, San Jose, California held the top spot for the most expensive place to buy a home in the U.S., with a median price of $1,577,500. However, this figure is actually down 5.8% compared to the previous year, and there has already been a 17% decrease from the peak median price of $1,900,000 recorded in the second quarter of 2022, as reported by the National Association of Realtors.
According to Money Inc, Milwaukee, Wisconsin has a high rental yield with the median housing price per square foot at $122, but low employment and population numbers are impeding property growth. The job growth rate is only 0.3%, population growth is 0.35%, whereas the violent crime rate is alarmingly high at 73.1 with a property crime rate of 59.5, notes Fool.com.
Unfortunately, Milwaukee is currently experiencing a challenging phase with low job and population growth, along with a dangerously high violent crime rate. All of this is deterring people from settling down in the city and landing it a spot on this list of places to avoid purchasing a home in 2023.
Another sunny California city that home buyers are urged away from is San Francisco. Don’t get us wrong, it’s a great place to travel for tourists, but when it comes to settling down and purchasing at home it’s not ideal.
During the last quarter of 2022, CNN writes that San Francisco experienced the most significant decline in real estate prices compared to any other city in the country, with the median price dropping by 6.1% to $1,230,000 from the previous year. Additionally, the source adds that prices of homes in San Francisco have already fallen by 21% in the fourth quarter compared to the peak median price of $1,550,000 recorded in the second quarter.
Buffalo, New York
In Buffalo, New York, the median housing price per square foot is $277, while the job growth rate is a promising 1%. However, Fool.com warns that the city’s crime rate is a concern, with a violent crime rate of 56.6 and a property crime rate of 61.4.
Additionally, Buffalo’s population growth rate is negative, standing at -0.23%. Although the city has several favorable factors, including job growth, the high crime rate and negative population growth are two big areas of concern for homebuyers.
Corpus Christi, Texas
Despite being situated in the heart of the county, Corpus Christi is currently experiencing a lackluster population growth rate, declining housing values, and a continuous decrease in employment rates, warns Money Inc. This can be attributed to the fact that there are relatively few individuals who express an interest in relocating to the area.
The city has a median price of $173 per square foot for housing, their job growth rate is 0.3%, and crime is ranked at 35 for violent crime and 56 for property crime, according to Fool.com. Although it’s a popular tourist destination with a rich history and scenic views, buying a home in Corpus Christi might not be advisable due to the city’s low job and population growth.
With a median home price of $725,000, the investment to purchase a home in Boston is substantial. Despite a reasonably high median rent of $2,629, the rental yield is only 4.4%, meaning it would take approximately 23 years for the rental income to cover the mortgage payment at that rate, explains Money Inc.
Currently, Boston’s real estate market is near its all-time highs, and it has historically shown low “beta,” which is a term used by equities analysts to describe the little price variation expected in a given market cycle. According to Market Watch, the Seaport area’s median selling price per square foot is comparable to the most expensive regions in Manhattan, making it an extremely expensive place to purchase a home.
According to a recent study from SmartAssest the state of Illinois will not be a great place to purchase a home in 2023. Five cities in this area take up the bottom six spots in America with Springfield, Illinois leading as the worst. These cities average a price growth of only 61.8%.
The state has experienced a constant decline in its population for the past nine years, leading to a decrease in prices. United Van Lines 2023 National Movers Study cites reasons such as the desire to live closer to family, job transitions, and retirement as the main causes of migration.
Another Illinois city lacking potential is Rockford. Money Inc describes it as the least robust real estate market in terms of both growth and stability among major cities. According to analysis, if one purchased a home in the Rockford metropolitan region between 1997 and 2021, there was a 39% likelihood that it would lose at least 5% of its value within the first 10 years of acquisition.
Additionally, the prices of homes in this region have only increased by 67.25% over this period, ranking it 398th out of the 400 metropolitan regions that were analyzed. For people looking to purchase a home in 2023, it might be a good idea to look outside this city.
Anchorage, Alaska has a median housing price per square foot of $260. Unfortunately, the job growth rate is -0.8%, and the population growth rate is -0.13%, indicating a decline in both areas. Although the city’s annual snowfall of 79 inches may be appealing to winter sports enthusiasts, Fool.com warns that finding a good job in Anchorage may be challenging.
Additionally, the city’s crime rate is concerning, with a violent crime rate of 50.9 and a property crime rate of 61.8, adds the source. Despite the attractive winter sports activities, the high housing costs and crime rate, coupled with low job and population growth rates, makes Anchorage a less than desirable place to purchase a home in 2023.
St. Louis, Missouri
From 2016 to 2018, St. Louis underwent the most significant decrease in population compared to any other U.S. city. Despite its relatively affordable cost of living, the city continues to experience an alarming rate of population decline with no evident solution in sight, says Money Inc..
The violent crime rate stands at 86.8% of the national average (22.7%), while its property crime rate is 85.1%. The source also adds that the population growth rate is a mere 0.23%. It’s the combination of high crime rates and low population growth that earns St. Louis a spot on this list.
Virginia Beach, Virginia
Virginia Beach has been ranked poorly in all metrics except for rental yield, making it a challenging location to invest in real estate. According to recent data reported on Money Inc, the neighborhood has experienced a mere 1.6% growth in home values, indicating that prices may be heading in the opposite direction.
Additionally, Virginia Beach’s primary issue is its lack of population growth, making it difficult to sell a property when the time comes, adds the source. Due to the few people interested in relocating to the area, it is highly unlikely that one will make a profit on their investment. As a result, Virginia Beach is considered one of the worst places to buy a home.
What to Look for When Choosing a City to Purchase a Home
Firstly, it is essential to research the city’s job market, as this will significantly impact the ability to pay for the home. A strong job market can also indicate future economic growth and stability, making it a wise investment. It is important to examine the city’s unemployment rate, industry diversity, and trends in job growth. According to Forbes, cities like Austin, Texas, Nashville, Tennessee, and Denver, Colorado, have seen significant job growth in recent years, making them desirable locations to purchase a home.
Another crucial factor to consider is the city’s real estate market. Research the city’s median home prices, trends in home value appreciation, and supply and demand for housing. Homebuyers should also consider the city’s crime rate, school system quality, access to healthcare, and proximity to amenities. Nerdwallet lists cities like Boise, Idaho, Raleigh, North Carolina, and Colorado Springs, Colorado, as attractive locations to purchase a home thanks to their consistent growth in home values.