Where can buyers find affordable suburbs? Try the East Coast
A new study found that homes within 30 miles of expensive metros can offer significantly lower prices.
Key points:
- The vast majority of suburbs analyzed were less expensive, based on price per square foot, then their neighboring cities.
- Homes in a suburb outside Miami, for example, are 65% more affordable than those inside the city limits.
- In some West Coast metros, suburbs were more expensive, while East Coast suburbs were generally more affordable.
Finding an affordable home during these days of elevated interest rates and low inventory isn't easy, but East Coast suburbs might be a good place to start.
The real estate search portal Point2 combed through home price data on 20 expensive U.S. cities and identified which suburbs within 30 miles were significantly more affordable. Topping the list was Medley, Florida, which is 65% more affordable than neighboring Miami. The price per square foot in Medley is $154 compared to $445 in Miami.
Novato, California, located in San Francisco's North Bay, offered the most cost savings of any suburb on the list with a price per square foot that was $401 cheaper than its expensive neighbor to the south.
Regionally, East Coast suburbs dominated the list, with 95 of the 100 most affordable suburbs located outside the metropolises of New York, Washington D.C., Boston and Miami. Of the top 11 suburbs, 10 were in the East, and all were at least 60% more affordable than the nearby city. The only non-East Coast suburb in that top 11 was Boulevard Park, just outside Seattle.
While the vast majority of the 777 suburbs studied were less expensive than their neighboring cities, 18 were costlier. The biggest outlier was Sullivan's Island, a suburb near Charleston, South Carolina: The price per square foot is a whopping $1,400, well above Charleston's average of $289.
West Coast cities have fewer affordable suburbs
It's not a given that suburbs will offer lower prices per square foot, particularly on the West Coast. Bay Area cities and Sacramento were among the areas with the smallest shares of affordable suburbs, with San Jose having the lowest share at 32%.
It's a different story in Salt Lake City, where 100% of the suburbs have lower prices per square foot compared to inside the city limits — though price differences varied widely. Salt Lake City's price per square foot is $345, while the communities around the city have price points of between $192 to $295 per square foot.
New York City (98%), Washington DC (97%), Boston (93%) and Honolulu (90%) rounded out the top five cities with the largest share of relatively affordable suburbs.
Affordability continues to be a key issue in this sluggish housing market. The National Association of Realtors projected the national affordability index was 98.6 in March, meaning that a typical household could afford less than 100% of a typical mortgage. After averaging nearly 150 in 2021, the index dropped below the 100 mark in June 2022, which was the first time that had happened on a national level in decades, according to Investopedia.
"We have to stop the bleeding before improvement takes place," said NAR chief economist Lawrence Yun last week at the association's legislative meeting. "We need to get more inventory, and the long-term solution is more home building."