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5 Housing Markets You Can Afford on a Minimum Wage

BOSTON (MainStreet) -- America's $7.25-an-hour minimum wage doesn't go far these days, but here's a look at some U.S. housing markets where families with two minimum-wage breadwinners should be able to buy their own homes.

"These markets are not automatic bargains, but there are bargains to be found there," says Daren Blomquist of RealtyTrac, which recently analyzed housing affordability in 325 counties for us and found a handful where families can pay for three-bedroom places with two full-time minimum-wage jobs.

Most of the markets are in the Midwest's "Rust Belt," and Blomquist says they're affordable because they generally have iffy job opportunities, declining populations and a "brain drain" of skilled workers.

"There are fewer people in these markets than there were 10 or 15 years ago, and especially fewer people with kind of skills that garner high-paying jobs that allow them to afford higher-priced properties," he says.

As such, Blomquist recommends doing lots of research before moving to these markets or buying investment property there.

"Your assumption shouldn't be: 'Well, I can buy a house for under $70,000 or even less than $50,000 in some cases, and that's a good bargain,'" he says. "You'll want to do the same due diligence that you'd do before buying a million-dollar home."

Still, the expert adds that the markets below aren't necessarily doomed to permanent decline.

"America is all about second chances, and I think a lot of these markets will have second chances," Blomquist says. "Buying when they're down and out could be a really good investment, especially if you do so smartly."

Read on to check out five counties that RealtyTrac found offer three-bedroom houses, condos or townhouse at prices families can realistically afford with around $21,000 of gross annual household income.

That's well below the $30,160 a year that two full-time minimum-wage jobs pay. (You can also click here to see five markets that require $150,000 or more in annual household income to comfortably afford.)

Minimum-wage workers in the counties below can cover a median-priced three-bedroom home's mortgage, insurance, taxes and maintenance with no more than 25% of gross annual income.

RealtyTrac based median property values on prices paid for three-bedroom homes sold during 2013's fourth quarter, while affordability calculations assume families buy places with 20% down and 4.46% 30-year fixed-rate mortgages. The firm also presumed typical homeowners pay 1.04% of a place's value in property taxes, 0.4% on maintenance and 0.35% for insurance in a given year.

Lastly, the list below assumes that families have two wage earners who make the applicable state or federal minimum wage and get at least 40 hours of pay every week (including those with holidays and vacations).

Markets appear in descending order of how much income you'd need to cover a median-priced three-bedroom in each county. Local jobless rates refer to U.S. Bureau of Labor Statistics figures from January (the latest period with county-level data available) and are not seasonally adjusted.

Muskegon County, Mich.
Salary to comfortably afford a three-bedroom:

Move to this western Michigan county and you can afford a three-bedroom home with just a tad over $21,000 a year in household income, or roughly what one full-time minimum-wage job and one half-time one pay. (Michigan has a $7.40-an-hour state minimum wage.)

Located along Lake Michigan some 20 miles northwest of Grand Rapids and 200 miles from Detroit, Muskegon County offers a typical three-bedroom there for just $57,083. That's up 18% from the same 2012 period, but still two-thirds less than the $181,757 average for the 325 counties that RealtyTrac studied.

All told, you'll face only $438 a month in housing expenses on a median-priced Muskegon County three-bedroom.

Blomquist believes the 172,000-population county has low home prices partly because of the Great Lakes manufacturing sector's long-term decline. Muskegon County's seasonally unadjusted 7.9% jobless rate is nearly a full percentage point higher than the 7% U.S. average.

"It all ties back to industries that were prominent in Michigan moving out and jobs and prices declining accordingly," Blomquist says.

The expert adds that the Upper Midwest tends to have lots of older, smaller homes that historically cost less money anyway.

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