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Stressed by high home prices? Here are 6 big cities where you can still find bargains

"[Some] cities are becoming more affordable for first-time buyers. There is now an opportunity for them."

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There's been no shortage of excitement in the housing market lately. Americans are moving coast to coast. Buyers are bidding on places they haven't seen in person. And homes have gotten much pricier.

The median sales price for single-family existing homes soared more than 23% over last year, according to the National Association of Realtors, reaching a record high of $350,300. While that's great news for sellers, it isn't so great for buyers.

In a new study, GOBankingRates set out to find which areas are bucking the trend and offering homes at more reasonable prices. Researchers looked for cities where the average single-family home price exceeded the national average in March 2020 ($247,282) but slipped below the new national average in March 2021 ($276,081). Home prices in these cities are also below the average in their respective states.

Here are six big cities where homes became less expensive than the national average over the past year, in order from the largest to smallest population, and how much homes there have increased in value.

1. Richmond, Virginia

Average March 2020 home value: $248,830
Average March 2021 home value: $274,540
Percentage growth: 10.3%

2. Melbourne, Florida

Average March 2020 home value: $250,377
Average March 2021 home value: $275,594
Percentage growth: 10%

3. Tamarac, Florida

Average March 2020 home value: $251,634
Average March 2021 home value: $273,609
Percentage growth: 8.7%

4. Port Orange, Florida

Average March 2020 home value: $247,604
Average March 2021 home value: $269,869
Percentage growth: 9%

5. Casselberry, Florida

Average March 2020 home value: $250,389
Average March 2021 home value: $271,931
Percentage growth: 8.6%

6. Orchard Park, New York

Average March 2020 home value: $247,451
Average March 2021 home value: $272,892
Percentage growth: 10.3%

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'I would not buy a house just because it's cheap'

"I think it's a great thing that cities are becoming more affordable for first-time buyers," says Rebecca Blacker, a broker at Warburg Realty. "There is now an opportunity for them to buy something that they couldn't have afforded prior to the pandemic."

Although home prices in these cities are rising at a less overwhelming rate than many others, that doesn't necessarily mean you should start making offers without doing your homework, says Mark La Spisa, a certified financial planner and president of Vermillion Financial Advisors. "If you're in an area that's thriving, then by all means it can be a great opportunity. But I would not buy a house just because it's cheap."

Investigate why the home you're looking at may have a lower price, La Spisa says. "Is there [structural] damage? Are the taxes in the area higher? Do your homework. Just because it's cheaper doesn't mean it's the right move."

Different cities have different cultures, and it's important to be happy where you are. Try renting in a neighborhood before you commit to buying, adds Blacker. That way, you'll get a sense of the area and whether you can see yourself there long term.

"It's important to educate buyers as to why a home is priced the way it is by showing them comparable properties ... and allow them to become familiar with the area in which they are looking," she says. "A cheap price tag is not a bad thing, as long as you know why a home is priced that way."

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How to build a better budget, no matter where you want to live

Buying a home can be a big lift, especially for younger people who are simultaneously trying to pay off debt, build emergency funds, and set aside retirement savings. Mortgage rates are once again climbing, meaning even a cheaper home can add up to more than you think.

Getting in touch with a mortgage broker can help you better understand what's possible, La Spisa says. "They can talk you through what kind of programs are helpful to your finances and give you an idea of what you can afford."

Do your homework. Just because it's cheaper doesn't mean it's the right move.
Mark La Spisa
certified financial planner, Vermillion Financial Advisors

Experts suggest you avoid taking on a mortgage that's more than three times your salary, or that has a monthly payment equating to more than 28% of your gross monthly income. Save steadily until you reach your goal, and consider all the options before making a final call, especially in a hot market.

Once you understand where you want to move and how much it will cost to live there, you can "begin putting your housing budget together, and let the inertia build from there," La Spisa says.

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