What Are the Cheapest States To Live In?

Plenty states offer great value without sacrificing strong job markets, education opportunities, or beautiful scenery. If you’re solely concerned about which states have the absolute best cost of living, you’re in luck. We’ve scoured multiple independent lists on housing affordability, the cost of living index (the cost of living index is a key metric used to determine the affordability of different states), median incomes, and affluence to find the top ten states where your dollar stretches a little further. Hint: many are in the American South or the Midwest.

So before you make that big move this year, take a closer look at these ten cheapest states!

Understanding Affordability

Affordability is a crucial factor to consider when evaluating the cost of living in different states. It encompasses various aspects, including housing costs, taxes, food prices, and transportation costs. Understanding these factors can help individuals and families make informed decisions about where to live, work, and invest.

When we talk about affordability, we’re looking at how far your dollar can stretch in different parts of the country. This means considering not just the price of a home, but also how much you’ll spend on groceries, utilities, and getting around town.

For instance, a state with lower housing costs but higher transportation costs might not be as affordable as it seems at first glance. By taking a holistic view of these expenses, you can better gauge which states offer the best value for your money.

What’s an Affordable State?

An affordable state is one that offers a lower cost of living compared to the national average. These states typically have lower housing costs, taxes, and living expenses, making them attractive to individuals and families looking to stretch their budgets.

Affordable states can be found in various regions of the country, and they often offer a range of benefits, including lower costs of living, affordable housing, low living costs and a lower overall cost of living.

In essence, living in an affordable state means you can enjoy a good quality of life without breaking the bank. These states provide a balance of reasonable housing costs, manageable taxes, and everyday expenses that are easier on the wallet. Whether you’re a young professional, a growing family, or someone looking to retire, finding an affordable state can make a significant difference in your financial well-being.

Factors Affecting Affordability

Several factors contribute to a state’s affordability, including:

Housing Costs

Housing costs are a significant factor in determining a state’s affordability. States with lower median home prices, lower property taxes, and lower rental costs tend to be more affordable. For example, West Virginia has the lowest housing costs of any U.S. state, with a median home value of $166,629. In contrast, states with high housing costs, such as California and New York, tend to be less affordable.

Affordable housing markets are a key indicator of a state’s overall affordability. When housing costs are low, it frees up more of your budget for other necessities and leisure activities. This is why states like West Virginia, with its remarkably low median home value, are so appealing to those looking to maximize their purchasing power.

Taxes

Taxes also play a crucial role in determining a state’s affordability. States with lower state income tax rates, lower sales taxes, and lower property taxes tend to be more affordable. For example, Oklahoma has a low state income tax rate of 0.87%, making it an attractive option for individuals and families looking to reduce their tax burden.

Lower taxes mean more money in your pocket. States with minimal state income tax or even no state income tax, like Tennessee, offer significant savings over time. This can be particularly beneficial for retirees or those on a fixed income, as it allows for better financial planning and stability.

Food Prices and Transportation Costs

Food prices and transportation costs are also important factors to consider when evaluating a state’s affordability. States with lower food prices and lower transportation costs tend to be more affordable. For example, Mississippi has the lowest grocery items index in the U.S., with prices 5.4% below the national average. Similarly, states with lower transportation costs, such as Oklahoma, tend to be more affordable.

Other Factors

Everyday expenses like groceries and commuting can add up quickly. States that offer lower prices on these essentials can significantly reduce your overall cost of living. For instance, Mississippi’s low grocery prices and Oklahoma’s affordable transportation and utility costs make these states particularly budget-friendly.

In conclusion, understanding the factors that affect affordability is crucial when evaluating the cost of living in different states. By considering housing costs, taxes, food prices, and transportation costs, individuals and families can make informed decisions about where to live, work, and invest.

Mississippi

Nearly every list we analyzed had Mississippi real estate right at the top for affordability. In the third quarter of 2022, the overall cost of living index sat at 15% below the national average. Every single expenditure was below average, with the housing expenses 32% below.

The median home sale price in November 2022 was $245,700, up 5.4% year-over-year (YOY). Still, that’s well below the $370,700 national median from the National Association of Realtors. Places like Ocean Springs, Horn Lake, and Hernando had double-digit price growth but were still the most affordable states and municipalities.

All the Great Perks

According to the US Census, residents had a median household income of $49,111, but remember, it’s a lower cost of living. You can still make ends meet nicely here. Despite the lower home values and affordable living costs, the average household income in Mississippi remains low compared to national figures, emphasizing the overall affordability and affordable cost of housing relative to the earning capacity of households in the state.

Besides the lowest cost of living, Mississippi residents have perks like a warm climate, beautiful rural and waterfront scenery, and lower higher education costs. The state’s bounty includes fresh seafood, agriculture, and root beer.

West Virginia

Coming in second on our cheapest states list is properties in West Virginia, and it’s no surprise since its cost of living scores nearly 21% below the US average. While health care costs did exceed the national median rate, housing was a whopping 60% below average!

The median sale price was $280,500 in November 2022, up 6.3% year-over-year. Cities like Shannondale, Harpers Ferry, and Inwood saw much action in the real estate market.

More than Affordability

According to the US Census, the economy is performing better here, with a median household income of $50,884. Mining and manufacturing remain linchpins of the state’s economy, but the service industry is also a top employer. Additionally, fair transportation and healthcare costs contribute to West Virginia’s affordability.

But there’s more to West Virginia than just affordability. Locals enjoy the best of four seasons while living in charming small “large” cities and towns. It’s bursting with natural beauty, from waterfalls and rocky cliffs to rolling hills and lush forests. People come from all over to flyfish or whitewater its rivers, hunt and hike its forests, and climb its peaks.

Indiana

Next up is Indiana. Its cost of living in the third quarter of 2022 was 10% below the national average. Utilities were a bit higher, but median home cost of housing 23% under the US average helps to compensate. So do the lower costs for groceries and transportation.

Its median home sale price in November 2022 was $235,500, which can be considered relatively affordable compared to other states. It also boasts a median household income of $61,944. Manufacturing employs the highest percentage of the workforce, but other key industries include logistics, information technology, agribusiness, and–surprise!–sports.

According to labor statistics from the Bureau of Labor Statistics, Indiana has a relatively low unemployment rate and favorable economic conditions, making it an attractive place to live and work.

Top Notch Education

This cheapest state earned points for its stunning scenery too! From blooming flowers in rolling hillsides to miles of sandy beaches along the Great Lakes, Indiana has plenty of recreational space. Another bonus: Indiana has made notable strides in education, particularly in reading proficiency. Recent data indicates that Indiana’s fourth-grade students have achieved a three-point increase in average reading scores, contrasting with a two-point decline nationally.

In cities like Fort Wayne, South Bend, and Indianapolis, you’ll find great restaurants, lively entertainment venues, exciting sports teams, and street festivals throughout the year. Plus, it has one of the nation’s lowest taxes on corporate profits, meaning you should look closer if you’re considering starting a business.

Kansas

Kansas might just be the place if you’re looking for a place to settle down with wide-open spaces. With the median cost of living in Kansas 13% below the national average and housing costs even lower at 28%, you can stretch your dollar in this midwestern state.

Community and economic research data supports Kansas’s ranking as an affordable state by analyzing various economic indicators and community demographics to understand affordability.

The Housing Market

The real estate market has been rising in this cheapest state; the median sale price was $261,700 in November 2022, an 8.3% YOY increase. The median household income here sits at $64,521. Key industries are agriculture, bioscience, advanced manufacturing, energy, and logistics.

Kansas also offers plenty of outdoor fun, from hiking trails and prairie parks to lake activities like fishing and boating. You can also explore the underground world of caves, take a scenic drive along winding country roads, or visit one of the many restored historic sites across the state. And if you want a more urban lifestyle, why not explore Kansas City and Wichita, where you’ll have music venues, arts and culture, and without big-city crowding.

Oklahoma

Around four million Oklahoma residents enjoy a cost of living 13% below and housing 27% below the national average. Oklahoma’s average cost of living was $34,533 per year in 2021, making it the cheapest in the southwest and the third most affordable in the US that year.

The real estate market is inexpensive here, with a November 2022 median home price of $234,600, a 5.3% YOY growth rate. However, note that appreciation tends to be slower in this state.

Oklahoma’s Economy

In terms of economy, Oklahoma’s median household income is $56,956. It relies heavily on mineral production, machinery, and transportation.

Oklahoma provides plenty of outdoor fun, from wide open plains to rocky mountains and breathtaking waterfalls. Plus, its capital city – Oklahoma City – is home to some of the region’s most vibrant shopping, dining and entertainment venues.

Alabama

If you can handle the heat and humidity, why not try moving to Alabama? This low cost state boasts affordable utilities and an overall cost of living nearly 13% below the national average as of the third quarter of 2022. Everything is below average here, from groceries to utilities to health care.

Housing costs were even lower – at 32% below economical state average! The real estate market here had a median sale price of $264,900 in November 2022.

Alabama may have a reputation for poverty in the past, but that’s not the whole state and not as valid today with the work-from-anywhere shift in companies across the country.

Median Household Income

Plus, the aerospace, homeland security, and automotive industries are essential here, with local companies playing a critical role in aerospace and defense craft production. Its median household income was $54,943, according to US Census data.

Alabama residents can live along the beautiful beaches of the Gulf Coast to historic towns in the Deep South. Nature lovers will enjoy exploring its rivers, lakes, and trails, while culture buffs can check out some of the southern charm found throughout the state’s cities and towns. For a hidden gem, check out Guntersville, with the 6th largest man-made lake in the world.

Georgia

Next up on our list of cheapest states is Georgia. It is 10% below the national average for its cost of living, with housing costs below the national rate by 22%. The thing about Georgia is to remember it’s a large state with a lot of diversity in its costs. If you look in the Atlanta metro, you’ll find a high cost of living and housing prices. However, the state on the whole is an affordable place to live.

The real estate market here is overall more on par with the national pricing. In November 2022, the median sale price was $348,500, but that doesn’t mean you can’t find a great deal. Places like Atlanta and Savannah push its median prices up. Still, affordable living can be found in cities like Macon, Columbus, and Augusta. The average rental price for an apartment in Georgia, according to data from RentCafe, is $1,608, which is below the national, average rent of $1,748

Georgia boasts a low unemployment rate; its median household income is $65,030 in 2021.

Best for Outdoor Fun

When you think of the cheapest states for outdoor fun, Georgia may not be the first one that comes to mind. However, it offers plenty of amazing things to do. Visit the sea islands along the coastline or go deep-sea fishing off the coast of Savannah.

Explore the state’s rivers and lakes by canoe or kayak. Culture lovers have art galleries and music venues scattered throughout this southern state. Atlanta is the home of the state’s professional sports teams, and towns like Blairsville in the Blue Ridge Mountains are a destination for hiking, camping, and fall leaf peeping. Want something closer to the city and rated as one of the most livable cities in America? Try Roswell.

Tennessee

Tennessee is another southern state where your dollar goes further, thanks to no state income tax! It’s the only affordable state on this list not to have an individual income tax, and that’s paired with an overall cost of living 10% below the national average. Housing costs are 16% lower.

The real estate market here is doing well, as Nashville has been listed as a hotspot for growth and appreciation for several years. Click here to see our guide to neighborhoods in Nashville.

In November 2022, the median sale price for the state was $370,800. The higher average home price is due to major metros like Nashville having record-high prices. Don’t worry, you can find many affordable housing options in small towns and rural areas throughout the state.

Low Unemployment

Plus, Census data shows Tennessee boasts one of the lower unemployment and poverty rates for a “cheap” state. Its median household income was $58,516 in 2021. Manufacturing, energy, and health care were among the state’s top-employing industries.

City dwellers looking for entertainment will find it in Nashville and Memphis, while adventure seekers will want to explore its mountains and forests. The Great Smoky Mountains is one of the nation’s most visited parks, but the state has miles of hiking trails, water trails, lakes, and streams. The state is the epicenter of the country music scene and, overall, has a strong musical tradition across many genres.

Missouri

The “Show Me” state will “show you the money” as one of the cheapest states with an overall low cost of living 10% below the national average and housing costs even lower at 20% under! Notably, utilities and transportation are highly affordable here.

The Real Estate Market

The real estate market here in Missouri has been booming recently; in November 2022, the median sale price was $236,700. The top industries are food processing, aerospace, and manufacturing. Interestingly, Forbes also listed beer as a leading industry. Missouri boasts a low unemployment rate, with its median household income at $61,043, according to the 2021 US Census data.

Missouri offers many activities, from hiking, fishing, and camping in its forests to exploring its rivers. Plus, culture buffs will find plenty of art galleries, music venues, and attractions throughout this state.

Iowa

Last on our cheapest states list is Iowa! This cheapest state has an overall cost of living 12% below the national average. Housing dropped 29% under the average!

In November 2022, the median sale price was $198,700 for a single family home, making it one of the most affordable on the list. This sale price was a 1% YOY drop, hinting you could find a great deal in Iowa.

Plus, Iowa placed just outside the top 10 for higher education in the US News and World Report rankings. It boasted a low unemployment rate at 3.1% in November 2022. Its median household income was $65,429 as of the end of 2021. Agriculture is absolutely key to the state economy as it supplies 1/14th of the nation’s food supply.

Despite the lower home values and affordable living costs, the average household income in Iowa remains below the national figures, emphasizing the overall affordability of housing relative to the earning capacity of households in the state.

Iowa may not have the beaches or mountains found in other cheapest states. Still, it does offer outdoor fun, including hiking trails, camping spots, and fishing areas throughout its forests and lakes.

Living in the Cheapest States

We could go on about these cheapest states, but we’ll save some surprises for you to discover. With so many affordable options available, one is bound to fit your needs perfectly! Have fun exploring all these cheapest states have to offer, and as always, let us know how we can be a resource for your real estate needs.