An analysis showed that Springfield and Joplin are not only the cities Missouri with the lowest cost of living, but also in the U.S. for this year.
The Council for Community and Economic Research released its rankings on the top 25 cheapest places based on information from 270 cities. Housing served as a huge factor for the two cities’ spots on the list. Joplin ranked as the eighth most affordable city with living expenses almost 18% lower than the national average. On the other hand, Springfield ranked 19th with its cost of living not far behind at 14.1% below the U.S. average.
Housing as an Investment
A low cost of living attracts people to move to these two cities in Missouri. If you’re looking to invest in residential properties, however, you should consider searching in Kansas City. Real estate agents in the city were likely busy with inquiries since it landed as the third best place for property investments during the first quarter.
Home prices in Kansas City increased nearly 9% between January and March compared to the same period in 2018, according to an index. It also listed the top two cities coming from the Midwest, so there are other options if you prefer to venture outside of Missouri. The market in Indianapolis recorded the biggest jump in housing prices over the last 12 months from the first quarter, as property values rose 12.5%. Cincinnati ranked behind with an 8.4% growth.
The Ideal Income for Home Owners and Renters
Before you think about making an investment, have you thought about whether your income is enough for covering the cost of rent or home ownership? While Joplin and Springfield are cheap cities, the cities’ median incomes are way lower than the average home prices. The median income in Joplin costs $41,063 compared to a median-priced home worth $120,000.
The gap is slightly narrower in Springfield, where the average home price and median cost $111,600 and $34,775, respectively. In Kansas City, a homeowner should earn $67,647 while renters should have an income of $72,303. These numbers aren’t too far behind the city’s median income of $50,136.
The 50/30/20 Rule
Whether or not you plan on investing or buying properties in Missouri, experts suggest that your income should be evenly divided based on the 50/30/20 rule. This means that you should ideally spend half of your household income on basic necessities such as food, health care, education and utilities among others.
Investments and savings will account for 30% of your income, while 20% should be spent on entertainment and leisure. If you are a tenant and more than 30% of your income already goes to rental payments, it’s usually hard to make ends meet regardless of where you live in the U.S.
Those who have plans on relocating to another city or state should consider finding a new home, which will require a real estate agent’s services. These agents should be familiar with the market in your target destination, so they should know where homes are selling for a reasonable price.