The Affordable (and more) Best Places to Retire List

In our recent article, “Whackiest Best Places to Retire List“, we poked a little fun at some of the “Best Places to Retire” lists our big named publishing brethren keeping come up with. In so doing we promised to come up with our own “Best Affordable List”, and here it is.

St. Petersburg Harbor

The exercise of identifying our “Affordable” List proved to be very interesting, and challenging, on many levels (see end of article for further explanation). The major challenge was exactly what criteria would we apply? Would our picks simply be the cheapest places in the U.S. (or the world)? Should we add other selection criteria like culture, crime rates, etc.? In the end we tried to think about what the average Topretirements visitor would be interested in. Since our visitors are a very discriminating group, we decided to use these selection factors:

- Affordability. Median home price in the community should be at least 15% less than the U.S. average of $174,100 (2nd quarter 2009, National Association of Realtors).
- Low tax burden. Only the 25 states with the lowest tax burden (per the Tax Foundation) were considered
- High culture. We weren’t going to pick just any cow town - our selections have all earned a “high” culture rating (110 or above in the system used on our review pages).

The other big challenge was how were we going to select the most affordable candidates from the 450 retirement towns profiled at Topretirements. Doing a manual sort would be quite a task. But relying exclusively on a computer to do the work could end up with some of the same strange results we made fun of in our “Whackiest List” article. Obvious solution: We used our free Retirement Ranger selection tool as the first pass, then made a careful review of the results to make sure the final selections were indeed “best places to retire”. The Retirement Ranger provided 20 towns that met our criteria. From those we chose the top 10, purely on the basis of lowest median home price in mid 2009. (all 20 selected are listed below).

The Top 10 Affordable (and more) Best Places to Retire from Topretirements (with median selling price of a home):
1. Fort Myers, FL $84,000
2. St. Petersburg, FL $120,000
3. Phoenix, AZ $132,000
4. Corpus Christi TX $133,000
5. Tampa FL $140,000
6. Aiken SC $140,000
7. Clearwater FL $142,000
8. Morgantown WV $142,000
9. Las Vegas, NV $142,000
10. Knoxville TN $145,000

These are the remaining 10 making the cut for “Most Affordable (and More)”:
Mesa AZ $145,000
Sioux Falls SD $146,000
Myrtle Beach SC $147,000
Pensacola FL $148,000
DallasFort Worth TX $150,000
Branson MO $150,000
Tallahassee FL $150,000
San Antonio TX $153,000
Clemson SC $155,000
Columbia MO $159,000

Comments about the 22 “Most Affordable” Towns on this list
Topretirements feels really good about the towns making this list. All are relative bargains compared to many other best places to retire. All are interesting places to retire where there is plenty of culture and where there are nice neighborhoods to live in. That said, some people will find places on the list that are more or less appealing than others. The point is, if you are looking for an affordable place to retire that is also an interesting place to live, this list is a good place to start.

Real estate prices have fallen tremendously in the last 2 years. In much of the country they are at 2003 levels, in some depressed parts of the midwest, they go even farther back. Here is what Karl Case, a professor at Wellesley College and co-founder of the Case-Shiller real estate price index had to say about current conditions in the New York Times: “there are…dangers…(but) housing is as affordable as its been in 20 years….I think we’ve seen the bottom”.

One of the most interesting outcomes of this list is that the affordable regions have shifted. Until this year the interior states tended to be offer the biggest bargains in real estate. With the collapse of prices in markets like South Florida, Nevada, and California, this is not nearly as absolute the case as it was a few years ago.

Notes About the Selection Criteria
1. Thanks to our current recession, real estate prices, the major component of affordability, are utterly chaotic in a big portion of the U.S. Using recent data is extremely important because in certain markets the average selling price in mid 2009 is one half (much of south Florida and Nevada) to one fourth (Ft. Myers) what it was in 2006. The market is so volatile that using the same criteria in 2008 would have produced a very different list - chances are the 2010 list will be different yet.
2. Related to the above, foreclosures and short sales are distorting prices in certain markets. The median sales price in Las Vegas might be $142,000, but that doesn’t necessarily mean you can buy into the average 55+ community for that little.
3. We used figures from the National Association of Realtors (NAR) whenever possible to determine housing prices in mid 2009. Smaller towns, however, are not included in that data. In those cases we used a combination of data from Zillow.com and City-Data.com. As a result the sales price comparisons are approximate and should not be taken as absolutes.
4. Taxes are not that important an consideration for most retirees, at least compared to proximity to family, climate, and housing costs. That’s because income and sales taxes are relatively insignificant unless income and spending are high. Property taxes, which are a bit harder to identify, have their greatest impact on people who continue to live in expensive homes. Bottom line about taxes: Consider including towns in higher tax burden states to broaden your search when using the Retirement Ranger.
5. Prices in active adult and 55+ communities are not quite as impacted by the housing meltdown as for homes in general communities. So if you move to a 55+ community your new home might not be quite as affordable as for the general homes in that community.

For further reference:
Most Tax-Friendly Places to Retire
25 Best Places to Retire