A Look on Undervalued Cities

Tara Mastroeni
Published: September 14, 2017 | Updated: December 10, 2021

Undervalued Cities

Everyone in real estate and mortgage investment, from run-of-the-mill home buyers to sophisticated people helping someone’s sell mortgage note idea become a reality note buyers online to real estate moguls, is looking for that once-in-a-lifetime deal.

And those deals that do come around in the higher priced markets – they are like realty unicorns. Often talked about, seldom seen.

However, if you’re willing to look a little harder, there are entire markets where properties are just one amazing deal after another. These undervalued cities are places where buyers can expect to save hundreds per square foot over what the property is actually worth, making them lucrative shopping for investors and buyers alike.

So where are these magical places? Well, the personal finance technology firm SmartAsset has compiled a list of the 10 most undervalued markets in 2017.

Let’s take a look at all of them.

What’s an Undervalued City?

When SmartAsset puts together its yearly report, it looks at house value as judged on house price and eight “quality of life” metrics. So there is a fair amount of subjectivity here.

The eight metrics are:

1. Unemployment rate – a thriving economy builds value

2. Crime Rate – sourcing data from the FBI’s Uniform Crime Reporting Metric, this measures violent crime per 100,000 residents

3. High School Graduation Rate – this looks at the 2014-2015 school year numbers, and speaks to communities that value the education of their children

4. Number of Entertainment and Dining Establishments – because if you’re going to make your home there, you want something to do

5. Walkability – this comes from walkscore.com, and measures how easy it is to navigate the city without a car

6. Rainy Days Yearly – days with more than 0.1 inches of rain or snow

7. Extreme Weather Days Yearly – any days below 40 or above 90 degrees

8. Population Percentage with a Bachelors Degree or Higher – From U.S. Census Bureau’s 1-Year American Community Survey

The metrics are assigned a dollar amount that help build a projected home value, which is then compared against actual home value. The bigger the difference in those two figures, the better the value of the properties in that market.

SmartAsset is looking for markets in great towns that perhaps don’t realize yet how great they are, and they’ve found some gems.

The 10 Most Undervalued Cities in America

10. Providence, RI

Projected Value: $256.61
Actual Value: $131.73
Difference: $124.86

9. Fort Collins, CO

Projected Value: $308.87
Actual Value: $183.33
Difference: $125.86

8. Philadelphia, PA

Projected Value: $227.20
Actual Value: $97.50
Difference: $129.70

7. Newark, NJ

Projected Value: $232.37
Actual Value: $95.83
Difference: 136.54

6. Plano, TX

Projected Value: $263.14
Actual Value: $125.75
Difference: $137.39

5. Baltimore, MD

Projected Value: $245.80
Actual Value: $104.17
Difference: $141.63

4. Overland Park, KS

Projected Value: $267.78
Actual Value: $123.50
Difference: $144.28

3. Pittsburgh, PA

Projected Value: $240.09
Actual Value: $82.08
Difference: $158.01

2. Augusta, GA

Projected Value: $213.95
Actual Value: $55.58
Difference: $158.36

1. Charleston, SC

Projected Value: $213.40
Actual Value: $106.75
Difference: $187.65

note buyers online

It’s important to keep a few things in mind when looking at the SmartAsset list.

First, SmartAsset isn’t comparing absolute value here. This becomes more obvious if we look at the entire list, which details 30 cities.

Torrence, CA (at #21) if by far the most valuable market on the list, at $460.67/sq ft. Augusta, GA is the cheapest, at $55.58. San Diego comes in at number 18 on the list, with an actual value of $368.75. more than triple that of the number 20 spot, El Paso, TX.

But the list isn’t speaking in terms of actual value. Instead, it’s looking at markets that are currently undervalued in terms of their amenities, which may be a good indicator of markets that are about to heat up.

Second, while SmartAsset has a great history of accuracy, there is a certain amount of subjectivity. What one SmartAsset values in a property may not match what any one homeowner or investment buyer values. So take it with a grain of salt.

And maybe look into buying property in North Carolina.

As a side note, SmartAsset notes that, if cost isn’t an option, our San Francisco is the best overall buy in the nation, leading the country in both projected and actual value.