Homeownership isn’t always all it’s cracked up to be. In fact, depending on where you live, you might not be able to afford a home.
If owning a home is too expensive, you might build more wealth by renting and then investing the difference.
But there are some states where homeownership pays off. SmartAsset took a look at data like average home price per square foot, appreciation, foreclosure rates and property tax rates to determine the states in which homeownership is most likely to pay off.
The financial analysis website gave each state a final score based on that data and then used the scores to rank the states. Following are the highest-ranked states, listed from lower- to higher-scoring.
Final score: 68.87 out of 100
Average home price per square foot: $95
June median home value: $145,300
Indiana might be a good place to buy, with homes that are somewhat affordable. Indianapolis features some of the most affordable homes of major cities in the country, as we reported earlier this year in “How Much You Need to Earn to Buy a House in 20 Major U.S. Cities.”
In fact, 62% of renters in Central Indiana, which includes the greater Indianapolis area, want to become homeowners, The Indianapolis Star reports. But there are also concerns about a housing shortage since the Central Indiana region is forecast to gain more than 270,000 jobs over the next two decades — and home building might not keep up.
Final score: 69.21 out of 100
Average home price per square foot: $136
June median home value: $188,900
Wisconsin home sales have lagged this year compared with 2018, Wisconsin Public Radio reports. But buying a home in the Badger State can still be a good value.
While price pressure due to a declining home inventory has been a concern, a recent increase in new listings could bring some of the prices down.
Final score: 71.52 out of 100
Average home price per square foot: $183
June median home value: $238,100
In order to keep up with demand, Minnesota would need to build an estimated 10,000 new homes per year, the MinnPost reports. Home prices have been rising as a result of demand outpacing supply, so it’s no surprise that this state could be a place where buying now could pay off later.
Plus, Minnesota offers a strong quality of life. U.S. News & World Report ranks the state No. 3 in the U.S. for both opportunity and natural environment.
6. Michigan (tie)
Final score: 75.83 out of 100
Average home price per square foot: $120
June median home value: $152,600
Even though homes in Detroit are on the expensive side, according to the Detroit Free Press, you might be able to get a good deal elsewhere in the state.
For example, instead of Detroit, if you want an entry-level price on a home, it might be a good idea to look in Madison Heights, Warren, Westland or Livonia, where you can find better deals, the Free Press says.
6. Colorado (tie)
Final score: 75.83 out of 100
Average home price per square foot: $246
June median home value: $378,500
Even though Denver is one of the most expensive major markets in the U.S. to buy a home, Colorado landed on this list. It’s one of the more expensive places to purchase, but at the same time, the one-year home value appreciation is 7.82%, according to Smart Asset.
Plus, many people like the quality of life in Colorado, which includes abundant opportunities for fun outdoors.
Final score: 78.48 out of 100
Average home price per square foot: $174
June median home value: $226,200
Wyoming continues to add jobs, and they are in sectors that aren’t the traditional oil and gas jobs that the state has seen in the past, according to Wyoming Public Radio. Construction jobs are driving some of the rebound in Wyoming’s economy, along with rising wages.
If you’re looking for a place to settle, where buying a home can be a good choice, the Equality State might be a good place to look.
Final score: 81.13 out of 100
Average home price per square foot: $186
June median home value: $235,300
If you’re considering buying a home in Montana, it might make sense to look outside of Missoula, where housing availability has been declining, according to the Missoulian. New construction is slowing in the western Montana city, adding to the pressure of rising prices.
However, if you’re interested in a home outside the city limits, you are likely to find some good deals that allow you to enjoy Big Sky Country.
3. South Dakota
Final score: 81.79 out of 100
Average home price per square foot: $166
June median home value: $191,400
If you’re looking for a place with plenty of access to the outdoors and the potential for a return on your housing investment, South Dakota might not be a bad choice.
U.S. News & World Report ranks South Dakota No. 2 among U.S. states for natural environment and No. 3 for fiscal stability.
Final score: 86.75 out of 100
Average home price per square foot: $235
June median home value: $341,800
Utah’s economy is one of the fastest-growing in the United States, according to the Deseret News. Part of the reason for that is the state’s labor force, which skews younger and is fast-growing and well-educated.
On top of that, Utah offers many outdoor opportunities and is home to multiple national parks and recreation areas.
Final score: 100 out of 100
Average home price per square foot: $161
June median home value: $267,600
I live in Idaho, and I once calculated that I could spend about $300 less per month if I bought a home instead of renting.
With Smart Asset’s analysis showing a one-year appreciation of 12.12% and annual property taxes and insurance, on average, under $2,000, it’s no wonder a homeowner’s likely return is high.
Plus, Idaho is a state known for open spaces, plenty of nature and a small-town feel — even in its cities.
Are steep home prices where you live making you consider moving to a more affordable state? Tell us about it in a comment below or at Money Talks News on Facebook.