Southern Metros Dominate List of Best Places to Buy a Home

In a new study from WalletHub, data revealed the housing market is skewed much more toward sellers this year, with mortgage rates continuing to trend upward and home values rising over 1.0% in the last year on average.

As mortgage rates remain above 7%, the report examines the strongest local real-estate markets, revealing the best places to buy a home in the U.S.

Five Texas metros topped the top 10 list of best places to purchase a home, as WalletHub experts suggest the housing market remains skewed toward home sellers rather than buyers. 

Top 10 Best Places to Buy a Home

1. McKinney, TX
2. Frisco, TX
3. Nashville, TN
4. Denton, TX
5. Cary, NC
6. Allen, TX
7. Durham, NC
8. Austin, TX
9. Port St. Lucie, FL
10. Gilbert, AZ

McKinney, Texas, voted the best place to buy a home in 2023, is a suburb of the Dallas-Fort Worth metroplex and the third-largest city in Collin County after Plano and Frisco, Texas.

Top 10 Worst Places to Buy a Home:

1. Boise, ID
2. Surprise, AZ
3. Fort Worth, TX
4. Charlotte, NC
5. Plano, TX
6. Tempe, AZ
7. Reno, NV
8. Roseville, CA
9. Richardson, TX
10. Longmont, CO

"In most parts of the country, now is a good time to buy because sellers are willing to negotiate on price and terms," said Kelly Snider, Professor of the Department of Urban and Regional Planning and Director of the Certificate in Real Estate Development Program, College of Social Sciences at San Jose State University. "Although many people pay attention to interest rates (which are substantially higher today than they were 12 or 18 months ago), I would advise buyers to pay more attention to job growth rates and unemployment rates within their metro area."

While the South topped the list of best places, Florida metros have the lowest share of seriously underwater (delinquent) mortgages.

1. Miami Gardens, FL
2. Hialeah, FL
3. Miami
4. Miami Beach, FL
5. West Palm Beach, FL

Places with the Highest Share of Seriously Underwater Mortgages:

1. Peoria, IL
2. Columbus, GA
3. Philadelphia
4. Baton Rouge, LA
5. Shreveport, LA

Shreveport is a city in northwest Louisiana with a population of less than 200,000 and was voted the worst place to buy a home in 2023.

"Interest rates are likely to remain at current levels for the foreseeable future, so postponing a purchase in anticipation of lower rates is risky," said Bennie D. Waller, William Cary Hulsey Faculty Fellow, Ph.D., Department of Economics, Finance, and Legal Studies at The University of Alabama. "Interest rates are more than double what they were 18 months ago, and as such, homebuyers with mortgages are likely to be hesitant to trade a 3% rate for a 7% rate. This is impacting the amount of housing supply, which in turn is driving up the prices of available housing, both for purchase and rent."

While home prices in the Golden State are the highest in the nation, pricey California cities remained dominant as they have the lowest share of delinquent mortgage holders. On the other hand, Midwest and Southern cities and one Northeast city hold the title of places with the highest share of delinquent mortgage holders.

Places with the Lowest Percentage of Delinquent Mortgage Holders:

• Santa Clara, CA
• San Mateo, CA
• Santa Monica, CA
• Santa Barbara, CA
• Costa Mesa, CA

Places with the Highest Percentage of Delinquent Mortgage Holders:

• Jackson, MS
• Springfield, MA
• Joliet, IL
• Baton Rouge, LA
• Portsmouth, VA

"The cost of construction has gone up significantly, especially in high-growth markets, because of the increased cost of labor and shortages of materials due to supply-chain constraints," said Nikhil Shah, Adjunct Professor of Real Estate at Rice University. "This has increased the price of new homes. Secondly, existing homes will also compete with new supply in the market."

As of August 24, the 30-year fixed-rate mortgage reached its highest level since 2001 and indications of ongoing economic strength will likely continue to keep upward pressure on rates in the short-term, according to Freddie Mac. In June, U.S. foreclosure filings exceeded 185,000 in the first half of 2023, maintaining its upward trajectory.

Boise is the capital city of Idaho with a population of nearly 240,000 and has the lowest foreclosure rates in the U.S.

Places with the Lowest Foreclosure Rates:

• 1. Boise, ID
• 2. Overland Park, KS
• 3. Madison, WI
• 4. New York, NY
• 5. Quincy, MA

Places with the Highest Foreclosure Rates:

• Stockton, CA
• North Las Vegas
• New Haven, CT
• Cleveland
• Palm Bay, FL

"There is no crash coming, and it is too expensive to boom anything," said Snider. "What we see is that exorbitant increases are stabilizing, and the entire housing market is getting less volatile and more predictable. That is good for the economy and good for employers who want a stable cohort of employees. The housing recalibration is very good for long-term stability in the U.S."

While buying a home is a big investment, it's important to weigh factors such as median home-price appreciation and job growth. For prospective homebuyers, while home prices may be high and the cost of living continues its climb, experts suggest taking the plunge and purchasing before the Fed raises interest rates once again.

To read the full report, including more data, charts, and methodology, click here.