Our industry specialist has reviewed and approved the final article. Also, some of the data presented here have been integrated into our real estate spreadsheets.
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Looking for the best deals in the US housing market?
If you want to uncover hidden gems, we’ve identified 12 cities where homes are significantly undervalued in 2025.
Let’s explore why these markets are flying under the radar and how they could be perfect for your next big investment.
This article gives you valuable insights, but remember, it’s not and will never be investment advice. We pull data from a range of sources to provide you with the most accurate picture possible, yet we can’t guarantee complete accuracy. Markets are difficult to predict. Make sure to do your own research and consult a professional before making any financial moves. Any risks or losses are your own responsibility.
1) San Jose, where high incomes make housing a bargain
San Jose, might seem expensive, but it’s one of the most underpriced housing markets in 2025 when you consider its strong economy and demand.
Thanks to a median household income of $142,635, the city’s income-to-housing price ratio is 10.9—lower than many other tech hubs, making homes relatively more affordable for local buyers.
The city also has a severe supply and demand imbalance. In October 2024, there were just 1,526 active listings, far below what’s needed for such a high-demand area.
Compared to other tech-heavy cities like San Francisco, San Jose offers better value.
Housing prices are high, but strong local incomes make homeownership more attainable for professionals, further reinforcing its status as underpriced.
Sources: Bureau of Labor Statistics, Federal Reserve Bank of Dallas, United States Census Bureau
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2) Rochester, where demand is high but prices remain affordable
The median listing price in Rochester is $299,900, far below the national average of $439,950.
For buyers looking for a more affordable market, Rochester stands out as a great option compared to pricier cities.
Homes in Rochester are selling fast—just 21 days on average, the quickest among the 50 largest metros in the U.S. This shows how high demand is, with buyers acting quickly to grab homes in the area.
The market is also becoming more active, with an 8.2% increase in active listings compared to last year.
Even with this growth, home prices remain far below those in similar cities, making Rochester feel like a hidden gem for buyers.
Sources: Federal Reserve Bank of Dallas, Norada Real Estate Investments, Zillow, Greater Rochester Association of Realtors
3) Cape Coral, where strong rent potential outpaces home prices
Cape Coral offers a unique balance of affordability and opportunity, whith an average rent of $2,774 per month, while the median home price is $396,012.
This gives the city a strong price-to-rent ratio, making it a great spot for investors looking to earn solid rental income.
Cape Coral is also one of the fastest-growing cities in Florida. With more people moving in every year, housing demand is only going to increase, which means buying now could pay off as competition for homes heats up.
Interestingly, rents have dropped by 9.1% in the past year.
While that might seem surprising, it actually creates a great opportunity for buyers to jump into the market before prices and rents rise again.
Sources: Redfin , United States Census Bureau, U.S.News , World Population Review, Zillow
4) Van Wert, where rents and prices remain the nation’s lowest
With an average rent of just $477 per month, Van Wert offers affordability rarely seen, at 69% lower than the national average
This huge gap means the city is incredibly affordable compared to the rest of the country, and it suggests there’s lots of potential for prices to rise as more people move in and demand grows.
The median home value is $160,108, making it one of the most affordable markets in the country.
Combined with relatively low local incomes, the income-to-housing price ratio points to strong potential for growth as the local economy expands.
Rents have increased by 1% over the past year. While modest, this steady growth reflects a stable market that could see greater appreciation as more buyers and renters discover the area’s value.
Sources: Redfin, Zillow, Data USA , Census Reporter
Our team has made this infographic to show the U.S. real estate markets with the highest and lowest value growth over the past decade, which is useful if you’re considering investing in American real estate.
5) Boone, where mountain charm and demand keep prices undervalued
Boone is proving to be one of the most underpriced housing markets in 2025, with a clear supply and demand imbalance.
Only 14 homes sold in October 2024, a sharp drop from previous years, leaving buyers competing for fewer options.
This tight supply is pushing prices up fast. The median sale price has increased 50.7% year-over-year to $493,000, reflecting how high demand has grown despite the limited inventory.
Buyers are recognizing Boone’s potential as a great spot for both primary homes and investments, which is helping drive the market’s momentum
Adding to this, the city's charm as a popular mountain destination draws second-home buyers looking for peaceful retreats. And its steady student population ensures reliable rental demand, making it a stable market for investors.
Sources: Redfin, Zillow, North Carolina Realtors, Federal Reserve Bank of Dallas, Norada Real Estate Investments
6) Santa Cruz, where tight supply keeps beachside homes underpriced
Santa Cruz stands out as one of the most underpriced housing markets in 2025, with an average home value of $1,148,405.
This is significantly lower than nearby Silicon Valley markets, even though Santa Cruz offers similar amenities like beachside living, proximity to tech hubs, and a thriving cultural scene.
Housing supply is tight due to strict zoning laws and geographical constraints that limit new construction.
With demand rising and so few homes available, these constraints are likely to push prices even higher.
The University of California, Santa Cruz adds even more value by creating steady rental demand from students and staff, making it an attractive market for investors.
Sources: California Association of Realtors, Redfin, Santa Cruz County of Realtors, Bay Area Market Reports , Zillow
7) Okeechobee, where prices are far below their potential
Okeechobee is gaining attention as one of the most underpriced housing markets in 2025. The average home value is $264,907, but the median list price sits at just $178,800.
This gap suggests potential undervaluation, as homes are priced lower than their market value.
Located in Florida, a state with strong population growth, Okeechobee is primed for future price increases.
Florida’s population is projected to grow from 23 million in 2024 to over 27 million by 2050. This significant expansion will keep driving demand for housing, especially in more affordable cities like Okeechobee.
The city’s diverse economy further supports its growth. With a mix of agriculture and tourism, Okeechobee enjoys steady economic activity, which strengthens the local housing market and creates opportunities for appreciation.
Sources: Redfin, Econ & Demographic Research, Bureau of Economic and Business Studies , Data USA
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8) Pittsburgh, where affordability aligns with tech-driven growth
Pittsburgh's average mortgage payment is just 22% of the median household income, far below the national average. This means homes are much more affordable for local buyers compared to other cities.
The city is also seeing growth thanks to $2 billion invested in a tech corridor since 2020.
This has created more jobs and drawn in new residents, boosting housing demand.
Another factor reinforcing Pittsburgh’s affordability is the cost of new construction.
Building new homes costs 25% more than the median price of existing homes, making existing properties a much better value for buyers.
Sources: EY, Redfin, United States Census Bureau, Neilsberg, Pittsburgh Technology Council
9) Cleveland, where quick sales haven’t inflated low home prices
The median listing price in Cleveland is $159,900, far below the national average of $439,950.
This affordability makes it a great option for buyers seeking budget-friendly markets.
Homes in Cleveland are selling in just 30 days on average, showing strong demand as buyers move quickly to secure properties.
The market is becoming more active, with an 8% increase in active listings compared to last year.
Even with more options available, prices remain exceptionally low compared to similar cities, making it a hidden gem for buyers and investors looking for value in 2025.
Sources: Redfin , Zillow, Realtor, Norada Real Estate Investments
10) Indianapolis, where housing is cheap relative to local incomes
In Indianapolis, Indiana, the income-to-housing price ratio is just 3.5, much lower than the national average.
This means homes are far more affordable compared to local incomes, making the city an attractive and undervalued market.
Investor interest is growing fast, with commercial real estate investments up 15% in 2024.
This shows that both local and outside investors see Indianapolis as a market with big potential.
The city is also planning for growth with new zoning laws passed in 2024. These laws will allow for more housing to be built, but home prices haven’t caught up yet. For now, this keeps the market undervalued, making it a great time to buy.
Sources: Redfin, Realtors, JP Morgan, Indianapolis Neighborhood Housing Partnership , Common Sense Institute Colorado
11) St. Louis, where affordability persists despite growing demand
In St. Louis, Missouri, monthly mortgage payments average just 18% of median household income, making homeownership far more affordable than in many other cities.
This is well below the 28% rule of thumb that defines a healthy balance between income and housing costs, highlighting the city’s affordability.
Despite the strong housing market nationally, home prices in St. Louis increased by only 2% in 2024, compared to a 7% national average.
This slower growth suggests the market hasn’t yet caught up to its full potential, offering buyers an opportunity to enter before prices rise further.
St. Louis is also seeing promising demographic trends, with its millennial population growing by 5% in 2024. As more young buyers enter the market, demand and home prices are likely to rise soon.
Sources: Redfin, Census Reporter, World Population Review, Neilsberg, Federal Reserve Bank of Dallas
- Top 12 most overpriced housing markets in the US in 2025
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So, can we still find "underpriced" housing markets in the US in 2025? Absolutely!
In 2025, several U.S. cities stand out as underpriced housing markets, offering unique opportunities for buyers and investors.
San Jose, with its median household income of $142,635 and a favorable income-to-housing price ratio, presents a strong case for affordability despite high prices. Meanwhile, Rochester's median listing price of $299,900 and quick sales highlight its appeal as a budget-friendly market. Cape Coral's strong price-to-rent ratio and rapid growth make it a hotspot for rental income potential.
Van Wert offers some of the nation's lowest rents and home prices, suggesting room for growth. Boone's 50.7% year-over-year price increase and limited inventory underscore its investment potential. Santa Cruz benefits from tight supply and steady demand, while Okeechobee's low prices and Florida's population growth signal future appreciation.
Pittsburgh's tech-driven growth and affordable housing costs make it attractive, while Cleveland's low prices and quick sales offer value. Indianapolis boasts a low income-to-housing price ratio and growing investor interest, and St. Louis remains affordable despite rising demand, with promising demographic trends.