Business Insider India has updated its Privacy and Cookie policy. We use cookies to ensure that we give you the better experience on our website. If you continue without changing your settings, we\'ll assume that you are happy to receive all cookies on the Business Insider India website. However, you can change your cookie setting at any time by clicking on our Cookie Policy at any time. You can also see our Privacy Policy.
Smart homeowners should take out an affordable mortgage on an undervalued home, according to economists at SmartAsset.
SmartAsset recently found the most undervalued cities to buy a home in the US, based on value per square foot.
It looks like the eastern side of the US is the most undervalued area to buy a home - more than half of the top 10 cities are located there.
Becoming a homeowner is often more complicated than one expects. It's also more expensive - millennials buying their first home today will pay 39% more than baby boomers who bought their first home in the 1980s.
In today's homebuying climate, it's important to take out an affordable mortgage - and even better to do so on an undervalued home. That's according to SmartAsset, which recently released a report on the most underrated cities in the US to live in based on current vs. potential housing values.
SmartAsset created a statistical model for 200 cities investigating how housing values, represented by price per square foot, were affected by eight quality of life metrics: unemployment rates, high school graduation rates, percent of residents with a college degree, crime rate, entertainment establishment density, average days of rain, average days of bad weather, and walk score.
The model (formally, a linear regression model) shows the positive or negative impact each of those eight measures had on housing prices. To determine how overvalued or undervalued a particular city was, SmartAsset compared the model's prediction for housing prices in that city based on how the city fared on the eight quality of life measures to the actual price per square foot in the city. SmartAsset ranked undervalued cities based on how much lower their actual housing prices were than the prices projected by the model.
Advertisement
For example, the average home in Los Angeles, California, is worth nearly $425 per square foot, according to Zillow. But according to SmartAsset's model, it should be worth nearly $525 per square foot - so residents are saving almost $100.
More than half of top 10 undervalued cities are located on the eastern side of the US.
Below, see the best places to buy a home where the average property is worth at least $80 less than what it should to worth.
