Two Tennessee Cities Among The 20 Most Affordable Large Metro Areas in the Nation
Mayor Andrew Betterton first came to Florence, Alabama, 50 years ago to attend the University of North Alabama — and he never left.
The metro area — known locally as The Shoals — sits along the Tennessee River in north Alabama about two hours from Birmingham and just under three hours from Nashville. It boasts a rich musical heritage — as noted in the “Muscle Shoals” documentary — and the birthplace of Helen Keller.
It is also happens to be the most affordable metro area in the country, according to the latest data from the Bureau of Economic Analysis’ Regional Price Parity Index. The index shows how costs compare in a metro compared to the national baseline of 100. That means a metro with an index of 90 would be 10% more affordable than the national average, for example. That index includes the cost of housing, services and goods as well, providing a more complete picture of affordability.
The Shoals’ overall index score was 82.42 — about 17% more affordable than the national benchmark.
The median price for a home listed in Florence is about $229,000, according to Realtor.com, well below the national median home listing price of $319,000. The average rent, according to a number of companies, hovers between $500 and $600 per month. The smoked duck and sausage pasta at local Italian eatery Ricatoni’s runs less than $16.
Betterton says he hears the same thing from a lot of people who visit the area.
Smaller metros in the South set the pace for affordability at the national level. The Shoals — which includes the cities of Florence, Sheffield, Tuscumbia and Muscle Shoals — was followed by Pine Bluff, Arkansas and Jackson, Tennessee.
McAllen, Texas, topped the list as the most affordable place among the nation’s 100 largest metro areas. Its overall regional price parity index score was 88.5. Winston-Salem, North Carolina (89) and Jackson, Mississippi (90.133) followed closely behind.
Coastal cities dominated the list of least affordable large metros, with San Francisco (117.4) and New York City (115.5) leading the way.
“More densely populated, job rich, and amenity-filled communities tend to be the most expensive,” said Anirban Basu, senior economist at trade association Associated Builders and Contractors, who stressed that major cities the world over are expensive, including Hong Kong, Singapore, London, Paris and Dubai. “This is reflected in home prices and rents.”
With the way prices have surged in the wake of the pandemic, Basu said affordability is a huge asset right now.
Basu is right that more Americans are seeking out affordability, at least when it comes to housing, fleeing from high-priced urban cores to areas further out — a so-called “donut” effect that saw population growth in the outer rings surrounding metro areas. An analysis of U.S. Census and Internal Revenue Service data by The Business Journals found that many were leaving the cities but staying in the surrounding metro areas, often moving to areas where housing remained cheaper while their incomes stretched further.
Remote work and the hunt for affordability
The rapid rise of remote work has only fueled this trend, Basu said.
“The bolstered pervasiveness of remote work adds fuel to this fire, with people able to be tied to employers in major metropolitan areas, but to live elsewhere. This represents a form of arbitrage, with people potentially earning Washington, D.C. or New York money, but perhaps able to live in Cumberland, Hagerstown, or Crisfield, Maryland, for instance,” Basu said, noting that ramped-up investments in rural broadband will further increase the appeal of less densely populated communities.
While experts agree these trends were in place long before the Covid-19 pandemic, they have accelerated over the last two years as workers shuffle locations in pursuit of a variety of benefits, including a better job, more affordable housing and better amenities.
Metros like The Shoals, which can sell both affordability and quality of life assets, are trying to capitalize. Florence is one of several cities trying to lure new residents with incentives.
“We’ve got good theater, we’ve got good sports programs. We’ve got a thriving biking and hiking area. I see it as terrific for me and I hope to spend the rest of my life here,” Betterton said. “It’s amazing to me that when I run into people that come here that say ‘wow we didn’t know this was all here.”