Affordable housing is increasingly out of reach for many young professionals, particularly those burdened with student loans. However, a growing number are turning to house hacking as a way to both become homeowners and begin investing in real estate.
House hacking involves renting out part of your primary residence to offset living expenses, such as mortgage payments. This strategy is especially beneficial for those who have the flexibility to live in different parts of the country and are looking to purchase their first property.
With that in mind, I’ve identified several promising markets where house hacking can pave the way to homeownership and generate rental income. These markets are still relatively affordable—with median home prices below the national average—and they also show strong job growth and appreciation potential. It’s important to remember that just because a market is affordable doesn’t necessarily mean it’s a good place to invest.
Choosing the Best Markets for Your First House Hack
For this analysis, I utilized median home price and rental data from Zillow, along with job growth statistics from the Bureau of Labor Statistics.
Many discussions about “affordability” fail to consider property taxes and rising insurance costs, so I also factored in data from the Tax Foundation and Insurance.com. (As a result, several Texas and Florida cities didn’t make the cut.)
After filtering out the most unaffordable markets and those with job growth below the national average, I narrowed it down to the 44 markets below. I chose to visualize these markets based on one-year job growth since it’s a key metric in this analysis.
From these 44, I selected 10 cities that offer the strongest fundamentals for first-time house hackers. While they may not be the most well-known, these “underdog” markets provide a great alternative for those who may not have the funds for a large down payment in high-appreciation or faster-growing markets.
From this list, I’ve highlighted 10 cities that offer excellent investment opportunities for young professionals looking to begin house hacking. They are presented below in no particular order.
Chattanooga, TN-GA
Chattanooga’s citywide fiber-optic “smart-grid” network provides some of the fastest internet speeds in the country, benefiting both homes and businesses. This infrastructure has also helped make Chattanooga a hub for startups, as evidenced by the venture capital firms active in the area.
The Chattanooga metro area has a predominantly blue-collar economy, with strengths in manufacturing, logistics, healthcare, and banking. The city’s innovative approach to its smart grid has contributed to steady job market growth and healthy price appreciation. For those who like what Tennessee offers but find Nashville unaffordable, Chattanooga is a strong alternative.
1-Year Job Growth: 2.33% (National: 1.48%)
Median Price: $309,819 (National: $420,800)
1-Year Price Growth: 5.47% (National: 4.28%)
Median Rent: $1,596 (National: $1,462)
1-Year Rent Growth: 4.80% (National: 4.49%)
Median Days on Market: 45 (National: 45)
Estimated Monthly PITI: $2,101 (Assuming a 20% down payment, 7% interest rate, statewide average insurance, and countywide median property taxes)
Columbia, SC
As the capital of South Carolina, Columbia is home to the University of South Carolina and Fort Jackson, the U.S. Army’s largest initial entry training installation, employing about 20% of the workforce.
This reliance on government employment adds stability to the local economy, though growth is slower compared to nearby cities like Charlotte, NC, and Charleston, SC. Columbia also has the lowest median home price among the top 10 cities in this analysis, making it a good choice for those prioritizing affordability, though better growth opportunities exist elsewhere on this list.
1-Year Job Growth: 3.41% (National: 1.48%)
Median Price: $253,466 (National: $420,800)
1-Year Price Growth: 4.06% (National: 4.28%)
Median Rent: $1,553 (National: $1,462)
1-Year Rent Growth: 4.76% (National: 4.49%)
Median Days on Market: 51 (National: 45)
Estimated Monthly PITI: $1,733
Fayetteville-Springdale-Rogers, AR-MO
The Fayetteville, Arkansas MSA, also known as Northwest Arkansas (NWA), includes Fayetteville, Springdale, Rogers, Bentonville, and surrounding towns. Growth in this area is largely driven by Fortune 500 companies like Walmart, Tyson Foods, and J.B. Hunt Transportation Services.
While I generally avoid metros dominated by a few large employers (what happens if they leave?), Walmart’s headquarters seems here to stay, especially with its strict work-from-office policy. This has fueled significant growth in the area, as most white-collar Walmart employees now need to live near HQ.
1-Year Job Growth: 3.31% (National: 1.48%)
Median Price: $342,579 (National: $420,800)
1-Year Price Growth: 4.74% (National: 4.28%)
Median Rent: $1,631 (National: $1,462)
1-Year Rent Growth: 3.75% (National: 4.49%)
Median Days on Market: 57 (National: 45)
Estimated Monthly PITI: $2,333
Greenville–Anderson–Greer, SC
Greenville’s economy is bolstered by manufacturing, distribution, and healthcare, with solid growth expected in the coming years. However, compared to markets like Fayetteville, AR, or Chattanooga, TN, I’m not convinced it offers the same potential for a high return on investment.
1-Year Job Growth: 2.80% (National: 1.48%)
Median Price: $299,908 (National: $420,800)
1-Year Price Growth: 3.69% (National: 4.28%)
Median Rent: $1,585 (National: $1,462)
1-Year Rent Growth: 4.38% (National: 4.49%)
Median Days on Market: 50 (National: 45)
Estimated Monthly PITI: $1,973
Indianapolis–Carmel–Greenwood, IN
Indianapolis has a low unemployment rate (3.6% as of June 2024), and its job market grew by 2.49% over the past year, compared to the national average of 1.49%. The metro area saw a five-year price growth of 56.29% (national: 49.49%) and a one-year price growth of 3.3% (national: 4.28%). While I’d like to see higher appreciation, Indianapolis remains one of the last affordable yet growing cities in the country.
Indianapolis also has a robust transportation and life sciences economy, with major exports including pharmaceuticals, motor vehicle parts, and medical equipment and supplies.
As the only metro with over 1 million jobs on this top 10 list, Indianapolis offers a unique opportunity. Despite a small decline in population within the city, many are moving to the suburbs, resulting in overall growth for the metro area.
In summary, the city’s diverse economy and low cost of living could continue to drive growth, though at a slower pace than more popular metros like Austin, TX; Boise, ID; and Nashville, TN. Indianapolis is a solid choice for those in the right industry looking to buy their first property.
1-Year Job Growth: 2.49% (National: 1.48%)
Median Price: $284,630 (National: $420,800)
1-Year Price Growth: 3.30% (National: 4.28%)
Median Rent: $1,588 (National: $1,462)
1-Year Rent Growth: 4.13% (National: 4.49%)
Median Days on Market: 39 (National: 45)
Estimated Monthly PITI: $2,057
Lafayette–West Lafayette–Frankfort, IN
Lafayette, located an hour north of Indianapolis and two hours south of Chicago, is home to Purdue University, renowned for its engineering, technology, and agriculture programs. Purdue has produced Nobel Prize winners and several astronauts, including Neil Armstrong. Adjacent to Purdue is the West Lafayette Purdue Research Park, which employs over 3,000 people in technology and health science sectors.
Lafayette topped Realtor.com’s winter 2023 housing affordability index, which considered local economy, price appreciation, and lifestyle amenities—factors similar to those in this analysis.
However, Lafayette is a small market, and the seasonal fluctuations of the college have a significant impact on the job market. It isn’t growing as fast as other towns of similar size, such as St. George, UT.
1-Year Job Growth: 3.23% (National: 1.48%)
Median Price: $266,785 (National: $420,800)
1-Year Price Growth: 8.45% (National: 4.28%)
Median Rent: $1,429 (National: $1,462)
1-Year Rent Growth: 7.22% (National: 4.49%)
Median Days on Market: 32 (National: 45)
Estimated Monthly PITI: $1,820
Lexington-Fayette, KY
Lexington boasts a diverse economy with strengths in healthcare, manufacturing, and logistics. The city’s job growth, price appreciation, and rent growth have all been fairly healthy.
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