With fixed mortgage rates rising by more than a full percentage point since May and more likely to go higher than lower, homes are becoming significantly less affordable for those not buying with cash. That means homebuyers still trying to take advantage of still-low mortgage rates might have to set their sights a little lower when shopping for what they can afford.
Why? Mortgages at a 5.5 percent annual rate are 12 percent more expensive than at a 4.5 percent rate, according to The Motley Fool, and at 6.5 percent, monthly mortgage payments are nearly 25 percent more costly than at 4.5 percent. And when rates recently slipped just slightly for the first time in weeks, home loan applications jumped.
Naturally, shopping for a less expensive home often means settling for a smaller one. The Motley Fool charted the average size of homes against the going interest rate at the time they were purchased. "As interest rates fell in the late 1970s, home sizes grew," it reported. "As rates rocketed in the early 1980s, home sizes contracted. After reaching a peak in the 1980s, mortgage rates have fallen precipitously, and homes have grown in almost every single year since." The average home built in 1975 was 1,535 square feet. By 2010, the average came in at 2,169 square feet.
For some large metro areas, "less expensive homes" might still mean the average three-bedroom home costs $300,000 and up. So we turned to some of the smaller market areas to see what we could find for around $100,000 -- or even less. In some cases, we found two-story homes with more than 2,000 square feet. Others were small ranch homes.
That you can get more square footage for your money in a smaller metro area is one of the 10 reasons BuzzFeed says that small towns are better than big cities. At the top of the BuzzFeed list: "Bye Bye Traffic Jams." AOL Real Estate took a look at seven smaller housing markets that would be quite affordable for those who don't have to live in Chicago, Atlanta or San Francisco, and found seven decent homes for about $100,000 or less.
SIZABLE HOMES FOR UNDER $100,000:
More on the housing market:
Finding a Dream Home at a Detroit Auction
5 Ways to Win the Home You Want
Winning in a Seller's Housing Market
More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Find homes for rent.
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