Want to live in a big city? You’re going to need a big budget. Housing affordability is a challenge everywhere these days, but the higher prices in large metro areas exacerbate the issue. Many hopeful homebuyers who can’t afford to buy in their city of choice are looking elsewhere to find more affordable housing markets, even if it means leaving the metro area or state altogether.

Instead of prioritizing a quick commute, some buyers — especially those whose jobs have embraced hybrid or remote work — are accepting a lengthy trip to the office in exchange for affordable housing markets. These so-called “super-commuters” may be on to something: About a quarter of respondents (24 percent) said in Bankrate’s April 2023 financial security survey that they’d be willing to move out of state to find a home they could afford. If you’re thinking about joining them, read on.

How far are you willing to move to be able to afford a home?

Regions that are big hubs for employment, like the San Francisco Bay Area and New York City, tend to also have very high housing prices. But what if you didn’t have to go into the office every day? A long commute is much more manageable when you’re only doing it once in a while.

In many parts of the country, homebuyers who work from home, or only go in periodically, are extending the radius of their home searches. Jason Moon, managing broker at Trueblood Real Estate in northwest Indiana, has seen this phenomenon firsthand. He recently helped a couple who both worked for Chicago-based companies relocate to St. John, Indiana, which can be a 90-minute-or-longer commute into the Windy City’s downtown business district.

“She doesn’t have to go into a physical office, and he spends most of his day on Zoom calls,” Moon says. “They sold [their] condo in the heart of the city and bought a nice house. Their expenses went down exponentially.”

In addition to enjoying lower long-term costs, Moon points out that buyers who are willing to trade downtown Chicago for northwest Indiana get a “pleasant surprise” with their closing costs. “We don’t typically use attorneys on transactions in Indiana, and we don’t have transfer taxes,” he says. “That can add up to thousands of dollars.”

The big-city parking struggle is also less problematic when it’s not every day. “If they only have to go into the office one day a week, they don’t mind driving in and paying $50 to park,” Moon says.

Mortgage
Paying for the move
How far away will you have to go to achieve affordability? When moving long distances, don’t forget to budget for moving costs: The farther away you move, the more expensive it will be to haul all your belongings to your new place. You may be saving money on the house itself, but the move could cost you thousands.

Rising home prices

In October 2023, a Bankrate housing market survey found that 32 percent of respondents thought they would never be able to afford to buy their dream home. While everyone has a different dream, it’s easy to see why so many people think they’ll never be able to achieve it: Home prices just keep rising.

The U.S. median home price in January 2024 was $379,100, the highest January price the National Association of Realtors has ever recorded, and experts don’t expect prices to fall anytime soon.

Those in the market to purchase are facing some of the most challenging affordability issues in many decades. — Mark Hamrick, Bankrate Senior Economic Analyst

“Those who are in the market to purchase a home are facing some of the most challenging affordability issues in many decades,” says Mark Hamrick, Bankrate’s senior economic analyst. “It’s not outlandish to see a home purchase cost 30 to 50 percent more [today] than it would have if someone had the opportunity to finance that purchase during the pandemic, when mortgage rates hovered in the high 2 percent and low 3 percent range.”

Rates are currently hovering around 7 percent, which lowers a buyer’s purchase power and makes home affordability even more challenging.

Gen Z and millennials struggle the most

The home affordability issue tends to be hardest on young, first-time homebuyers. Renters don’t have the proceeds from the sale of one place to put toward a new place, and even if they’ve managed to score a pay raise, inflation is keeping them from doing much with that extra cash.

Mortgage
Younger generations struggle with home affordability
  • 48 percent of Gen Zers (age 18-26) who aspire to own a home cite a lack of income as their primary barrier to affording the purchase.
  • Among older millennials (age 34-42), 53 percent said affording a down payment and closing costs is the primary thing holding them back.
  • Younger millennials (age 27-33) cited a variety of reasons: insufficient income (49 percent), high home prices (47 percent) and not being able to afford a down payment and closing costs (42 percent).

Source: Bankrate financial security survey

When Moon first started his career in real estate, he says, the majority of people moving to Indiana from Chicago were retirees and empty nesters. Lately, however, he has noticed a big shift, with buyers closer to 30 years old looking to make the move.

“Since the pandemic, we have had a lot more young buyers saying they want to live in Indiana,” Moon says. Many young families come for the public schools. Lower taxes are also a big part of the appeal: Some buyers pay a fraction of the annual tax obligation in Indiana that they would in Illinois, he says.

Considerations for super-commuters

Before you start hunting for homes far away in your quest to become a homeowner, consider these key questions.

  • How often are you going to commute? A two- or three-hour commute once a week might give you some extra time to think, but doing it five days a week might drive you crazy. Think about your employer’s expectations for your time in the office, and whether the amount you save on housing costs will outweigh your commuting costs — including gas, parking and wear and tear on your car.
  • What are the public transportation options? Is it possible to take a train or bus instead of driving? If so, how much would that cost, and how long would it take?
  • Will your employer be OK with it? If you’re young and hoping to climb the ladder at your company, face time might be a key piece of the puzzle. Ask your boss for their thoughts, especially if you anticipate shifting your hours to beat the traffic. And check with HR, too, as some companies are only authorized to employ residents of certain states.
  • What about your friends and family? Moving out of state doesn’t just bring you farther from your office; you’ll probably be farther from friends and loved ones too. Consider whether you’re willing to put in the work to maintain the relationships.
  • Do you have the right real estate agent? If you’re moving far away, you may not have a good idea about which neighborhoods or towns will be the best fit. An experienced local agent can help you find the lifestyle you’re looking for in a home you can afford.

It’s important to remember that buying outside the big city still requires a lot of cash and commitment, despite the upfront savings and lower cost of living. “Homeownership is a key pathway to attainment of wealth,” Hamrick says. “But getting the keys is just the first stop on the financial journey of homeownership. The longer one owns a home, the more they will experience unexpected expenses, such as replacing a roof or an HVAC unit.” You might save money upfront, but don’t forget to keep saving for the future.