If you’re an average American looking for a home today, you can expect to pay about $403,000 for it, according to Redfin data. It’s a chunk of change, especially when compared with homes just five years ago, when the median single family home sold for close to $286,000. Back then, interest rates were considerably lower, too, which made for a much lower overall payment.
But low inventory and high demand continue to nudge the median home price skyward, so there’s no point in dwelling on the good old days. Instead, let’s see what you can buy in the United States for $2,500 a month today.
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How Much Can You Spend with a $2,500 Per Month Mortgage?
A $2,500-a-month home in the United States is one that, according to our calculations, comes in just under the median single family home price, right at $400,000. The principal and interest payment, after the average 6% down payment for a first-time home buyer
, and with a 30-year fixed-rate home mortgage at 7.06%, is right at $2,500. Other fees, like homeowners insurance, mortgage insurance, property tax and homeowners association dues would be in addition to this price, but not everyone escrows their mortgage, nor are these fees present with every purchase.
What Does a $2,500 House Look Like?
Since a $2,500 per month house is roughly the median single-family home in America, it’s possible to find them almost anywhere. They may be more rare in areas with a high cost of living, but even in places like Palm Beach County, Florida, you can get a $2,500 home.
According to Klaus Sinn, broker-associate at eXp Realty in West Palm Beach, Florida, you can buy an older but remodeled 1,000-square-foot, two bedroom, one bathroom home in a decent neighborhood like Palm Beach County’s Lake Worth area. It’s a small beach town in his county, so you’d even be close to the beach, though that price doesn’t buy a house directly on the beach.
In Atlanta, $2,500 also gets you a remodeled home, but often something a bit more substantial.
“A three bedroom, one bath home or even a three bedroom, two bath, is very common at the price point,” says Bill Murray, senior managing broker at Compass Greater Atlanta. Many of these homes, Murray says, are older, but in excellent condition, with big yards and often located near the Atlanta BeltLine — a 33-mile loop of walking and biking paths that connects the city with public art, events and urban renewal projects .
If you’re looking for even more bang for your $2,500 buck, that kind of money goes really far in Ohio. Medina County, Ohio, just outside of Cleveland, is a bargain hunter’s paradise when it comes to homebuying.
“A $2,500 per month home in Medina looks like a four bedroom, two and a half bath, 2,000-square-foot colonial built within the last 25 years, on a quarter-acre lot with at least a two-car attached garage and very possibly a finished basement,” says Jessica Chodaczek, real estate agent and team leader at LoFaso Real Estate Services in Medina County. “Most of those are going to be located in a neighborhood with sidewalks and possibly a pool or a playground, and within a reasonable driving distance of downtown Medina and also the freeway.”
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Types of Cities Where $2,500 Homes are Possible
From coastal towns to booming cities of industry and pleasant Midwestern suburbs, $2,500 homes can be found in a wide range of locations with a reasonable cost of living.
Many of the cities where you can get substantial housing for your $2,500 budget have a lot going for them, like the construction of the BeltLine in Atlanta or the proximity to the beaches of eastern Florida in Palm Beach County. But some are also priced in that range because they’re overcoming unfortunate — and often unearned — reputations that may stem from decades-old incidents.
“We don’t have the flashy reputation of any of the coasts or any of the great big cities, we’ve just kind of been slow and steady,” says Chodaczek. “With the increase in remote work, we’re finding a lot of people are saying, ‘hey, I can get so much more for my money in greater Cleveland.'”
According to Chodaczek, national news coverage of the 1969 Cuyahoga River fire in Cleveland proper had a long-term effect on the desirability of Cleveland to outsiders, due to the water pollution and environmental issues that caused it. However, Cleveland has been working hard to make huge changes to environmental policy, as well as adding new and better green spaces like their “Emerald Necklace,” a greenway system that surrounds much of the metro area.
[READ: The Most Undervalued Housing Markets in the U.S.]
Advice for $2,500 Homebuyers
Although $2,500 a month is a pretty simple find in a lot of markets, it can still be an expensive buy for a lot of first-time homebuyers who are trying to get onto the property ladder. The competition is fierce and it may seem it would be easier to wait it out, especially when you add in hurdles like current interest rates. Experts say it’s still better to buy now than to wait.
“Do whatever you need to do to get your finances in order to get into your first house and start building your real estate wealth — that is a number one priority and should not be impeded by anything,” says Murray.
As for what to buy, that’s up to you. Choosing a house that fits your needs and makes you happy is really the whole point.
“Make sure you’re clear on what your must-haves are in terms of space and location,” Chodaczek says. “Don’t be swayed by something that has some more upgrades but doesn’t offer you the space or the location that you want. You can always do the upgrades and the improvements later.”
Remember, due diligence is still important. There has been a lot of chatter about waiving inspections in very hot markets, but this is one of the worst things you can do for your long-term financial health, according to real estate professionals.
“I think it’s really important to have a thorough inspection on the house,” Sinn says. “One thing that happens a lot is that people buy a house and they’re already at the max of their payment. So, it’s extremely important that they know what the future expenses are going to be and calculate them into their budget or get a good home warranty to cover at least some of those items.”
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What Kind of House Can You Buy for $2,500 a Month? originally appeared on usnews.com
