If you had the chance to live someplace where housing is truly budget-friendly, you’d probably consider it, right? A smaller mortgage or rent bill can noticeably improve your monthly finances.
But would relocating to a small town be worth it to save more money?
After crunching a large set of data, Business Insider (BI) pinpointed the most budget-friendly small towns across the United States. If you’re worried about how much you’re paying for housing or are thinking about moving to a place with a lower cost of living, check out their results for some wallet-friendly alternative housing cheap places to live.
How Business Insider Gauged Affordability
A BI team measured a town’s affordability by figuring out the share of household income consumed by housing expenses.
Lists and rankings editor Melissa Stanger, features reporter Emmie Martin, and quant reporter Andy Kiersz evaluated three housing groups: owned homes with a mortgage; owned homes without a mortgage; and rental units. Their analysis was limited to towns with populations of 10,000 or fewer.
“To rank the towns,” Andy Kiersz says in a methodology post, “We averaged together the percentage of households with housing costs below 30% of income in each of the three categories, weighted by how common each category is in each town.” The higher the percentage of households spending less than 30% of their income on housing, the more affordable the town.
They used figures from the Census Bureau’s American Community Survey, which samples a portion of the population annually to help decide how federal and state funds are allocated. While the survey covers many topics like education, family composition, veteran status and disabilities, the crucial item for this list is “where you live and how much you pay for some essentials.”
Which Towns Are the Most Affordable?
Louisiana and Texas lead the pack for affordability — Louisiana placed eight small towns on the list, and Texas had seven. Business Insider also published a state-by-state list naming the most affordable small town in each state.
While you might assume only out-of-the-way villages would qualify, the list includes a variety of communities. A few notable towns stood out:
- Quartzsite, Arizona (93.2% of homes are considered affordable): This town isn’t exactly quiet — it’s a major hub for jewelers who come for a two-month gem show each year.
- Reidland, Kentucky (93.4% of homes are considered affordable): BI points out that Reidland’s median household income is more than $20,000 above the Kentucky median. It’s also recognized for its low cost of living.
- Chevy Chase, Maryland (84% of homes are considered affordable): This town sits so near the nation’s capital that there’s even a Chevy Chase neighborhood over the line in Washington, D.C. “The average household in Chevy Chase earns more than $250,000,” BI notes, “which is extremely high relative to local real estate costs.”
- Enfield, New Hampshire (87.3% of homes are considered affordable): Enfield reports a 0% poverty rate. The town recently finished a significant project, along with nearby communities, to boost broadband speeds and encourage affordable internet access.
- Boomer, West Virginia (100% of homes are considered affordable): Call Boomer the ruler of affordable housing. The 2010 census counted just 615 residents there.
Why Use a 30% Threshold?
Why is the 30% benchmark so central to evaluating these towns? It’s a commonly used economic yardstick for affordability. “Housing that consumes less than 30% of income is typically considered ‘affordable,’ since this theoretically leaves enough income for other necessities,” BI reporters explain.
And many households are discovering it’s nearly impossible to find housing that costs under 30% of their income.
Consider New York City, where the median rent equals 58% of the median income. New Yorkers are dedicating more than half their earnings to reside in the city. Between 2013 and 2014, rents rose faster than wages in each of the 25 largest metropolitan areas in the U.S., Karen Weise reported for Bloomberg.
Some economists have dismissed the 30% rule, arguing the arbitrary figure was tough to meet in the past and is even harder now. Forty-one million households pay more than the suggested 30% on housing, Weise also reported. One in five households spends over 50% of their income on housing.
That reality is what makes Business Insider’s ranking appealing — staying below that 30% target almost feels like reaching the American Dream.
Think About Other Things Before You Move
The towns on BI’s list all have populations under 10,000, so if you crave big-city amenities, you might want to look elsewhere.
Commuting is another factor to weigh, since many of these towns are far from their state’s major employment centers. “For many families, commuting is the second-largest monthly cost, one that’s directly tied to where they live,” Weise cautions. “A house in a distant suburb may seem inexpensive, but when you add fuel for a long commute the expense grows a lot.”
However, many people are eliminating commutes entirely by working remotely, either for employers that allow telecommuting or as independent contractors. With reliable Wi‑Fi, any of these towns could suit someone aiming to take work on the go.
Your Turn: Would you relocate to one of these small towns to enjoy the financial perks?
