But the real estate market has changed significantly in the past several years, and due to a lack of homes for sale, mortgage-interest rates at or near historic lows and a pandemic that sent city dwellers to the suburbs and beyond, cheap homes have all but disappeared.
In fact, you will be hard-pressed to find a house that you can live in for $5,000. If price is more important than location, your best bets include small cities and towns, and more rural locations. You might also find a foreclosure in a city or be able to pick up a home for back taxes (the tax bill owed might be $5,000) at a sheriff’s sale.
At HUDHomeStore.com, which is the official website for Federal Housing Administration foreclosures (also known as HUD homes), there were no homes we could find listed for around $5,000, but in White Hall, Ill., (population 2,320) there is a HUD home listed for $16,350 at the time of this writing. The home has three bedrooms and one bathroom in 1,108 square feet. HUD homes are supposed to be inspected and be livable. But at that price, you should expect to put in a fair amount of work.
During a cursory search, we found other homes listed in rural areas for less than $20,000. Some of these offer seller financing — which is helpful, since it is difficult to get a mortgage for less than $50,000. There simply isn’t enough profit for the lender who is making that loan.
Given the scarcity of housing inventory these days, homes in most metropolitan areas are selling quickly with multiple offers. Finding a treasure for a few thousand dollars is difficult. That is why many people looking for more affordable homes have turned to tiny homes, which typically have between 200 to 500 square feet, and require you to rent or buy a lot on which to put them. Those with smaller budgets also look at mobile or manufactured homes, which can be larger and more expensive, and also require that you buy or lease a lot.
With more homeowners hunkering down because of the coronavirus and staying in their homes longer, the home improvement industry experienced a surge of demand last year, although demand is expected to fall this year, according to the Leading Indicator of Remodeling Activity, released quarterly by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University.
Prices are going up, in part, due to a shortage of building materials but also because there is a shortage of qualified tradespeople. According to a recent Wall Street Journal story, lumber “is more than twice the typical price for this time of year.” Roofing, plumbing, PVC piping and other construction materials have likewise gone up in price. If you plan to do a lot of construction and have a small budget, you may have to phase the work to make it affordable.
To go back to your question, you should look to buy a home near where you work. And, if you can work in more rural communities and small towns, and earn a good living, that plus your savings should enable you to get a mortgage at today’s low interest rates and join the ranks of a first-time home buyer. Good luck.