The U.S. housing market has gotten a little pickled lately. With prices and mortgage rates soaring and a shortage of homes for sale, not much is moving at all. Ongoing talk of a government shutdown threatens to further stultify the market in the short term, while potential buyers are already frustrated following over a year of unfavorable conditions.
Naturally, thoughts turn to other options. Families with the flexibility to try things another way can’t help but be tempted by the dream sold by renovation shows, including Restored by the Fords, Grand Designs and the perennial favorite, This Old House. Might you move into a cheap fixer-upper and make a tidy profit a way down the line?
It’s possible! But like so much with property deals, it depends on where in the land you are. To identify the cities where fixer-uppers are the cheapest to buy and command the highest resale premium once renovated, data analysts here at Frontdoor compared thousands of listings from real estate listings on Redfin.
What We Did
We analyzed home listings data from Redfin to identify the cities with the most homes tagged as “renovated” or “fixer-upper” per 1,000 listings. We also calculated the average price for these homes. We ranked cities based on the difference in average price between renovated or fixer-upper homes against homes without either of these tags.
- Baltimore, MD, is the city with the most renovated homes available: 362.3 per 1,000 listings.
- New Orleans, LA, is the city with the most fixer-uppers available (90.2 per 1,000).
- Detroit, MI, is the city where renovated homes have the biggest price mark-up, costing an average of 75% more than a non-renovated home.
- In Louis, MO, the average fixer-upper costs -64.69% less than the average non-fixer-upper, the best reduction of any U.S. city.
The Best and Worst U.S. Cities for Buying a Renovated Home
Baltimore, Maryland, is the city where it’s easiest to find a renovated home. In fact, there are 22.4% more renovated homes in Baltimore than in second-placed New York City. We also found that Baltimore is the city with the eighth-best price markdown on fixer-uppers (-47.43% against the average local home). Together, these factors suggest that a high number of buyers have seen a great opportunity to buy cheap and turn a profit.
Decades of population loss have left many Baltimore houses uninhabited, falling into disrepair and suitable for renovation. Meanwhile, there is ongoing demand for good homes from local government workers and military personnel, making it a viable market for the industrious investor. Renovated homes are harder to come by in Montana, Texan cities, and the Dakotas.
Next, we looked at how much more or less the average renovated home costs compared to its non-renovated neighbors. New York City renovations command a 57.93% premium despite the high number of them on the market. Detroit, Michigan, offers the biggest mark-ups of all. An abundance of industrial-quality materials for upcycling makes it a great location for renovating a house to a high standard on a budget.
We found two cities where the data is very discouraging for potential home improvers. Renovated homes in Durham, North Carolina, and Kansas City, Missouri, lose -30.59% and -21.05% in value, respectively, compared to homes that aren’t listed as renovations. Lately, a high number of out-of-state investors have bought up Kansas City houses to rent out, with relatively little regard for the condition of the home.
“We see investors coming in buying properties immediately,” says Geoff Jolley, executive director of the Local Initiatives Support Corp in Kansas City. “It’s an investment for them. And so they don’t really care about the nuances of negotiating the price or having the survey done ahead of time and all the things that you as a homeowner might actually care about.”
The Best and Worst U.S. Cities for Buying a Fixer-Upper Home
If you’re looking for a fixer-upper to buy, we found that the cities with the best availability tend toward the Eastern states, while the cities with fewer than one fixer-upper per 1,000 listings tend toward the West. But the city with the highest proportion of fixer-uppers is in the Deep South: New Orleans, Louisiana.
New Orleans has a rich architectural history and “can be a treasure trove of renovation opportunities,” according to the city’s Preservation Resource Center. We found that 9% of homes for sale in New Orleans are fixer-uppers. And they cost, on average, -44.86% less than homes that aren’t listed as fixer-uppers — the tenth-best premium for buyers in the U.S.
However, the city with the best prices for potential refurbs is 700 miles north of New Orleans, according to our findings. Buying a fixer-upper in St. Louis, Missouri, costs -64.69% less than buying somewhere ready to live, while the resale price of the home, once renovated, is likely to match the average price across all categories, dollar for dollar.
St. Louis offers an abundance of ‘distressed’ properties. In 2019, the city piloted a “Dollar House” program to sell off some of the 12,000 buildings and lots that it owned. According to Vice, the project listed “500 properties that buyers [had] to commit to staying in for at least three years—to discourage flippers from snapping them up for profit.”
Things to Consider When Buying a Fixer-Upper vs. Move-in Ready Home
Their confidence buoyed by this period of self-reliance, Americans who can afford to take on a fixer-upper may well become tempted to do so — especially in the favorable conditions of some of the cities we’ve identified. But buyers should consider the following factors before leaping into such a massive project.
- Your budget
Some 59% of first-time buyers are in the market for either a fixer-upper or modest starter home, with more than half of those citing “current market conditions” for their decision. A fixer-upper is often significantly cheaper to buy than a regular home, but the cost of renovation, alternative accommodation, and other factors such as temporary heating solutions, can quickly strain your budget.
- Your capacity for admin
You may be drawn to a renovation project to save money, put your DIY skills to work or express your secret inner designer. But building codes and contractor negotiations will account for a big chunk of the time you sink into the project.
- Your time and emotional state
A big renovation job can quickly eat into your schedule — especially if you’re particularly passionate about it or plagued by setbacks. You can afford the building, but can you afford the mental real estate to manage this project on top of work, family and other interests?
- The potential return on investment
A home can be a lifelong investment, accumulating value and memories as the years and decades pass. Or it can be a short-term investment if you plan to turn it around quickly with a smart renovation. If thinking about the latter option, it’s essential to do the math and look at the market forecasts before sinking time and money into the project.
From Distressed Home to Dream Home
Americans are likely to spend around $479 billion on renovations in 2023. And what they spend it on can make a big difference. According to the National Association of Realtors, the most profitable interior fix-up is to add hardwood floors, offering a renovation ROI of 147%. Other top returns come from improving insulation (100% ROI) or complete kitchen renovation (75% ROI).
But it all depends on where those floors, walls and kitchen counters are. If your city doesn’t fare so well in the findings of our study, it might be wiser to put your project on hold — or look further afield for a high-potential fixer-upper.
Open the Frontdoor
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To determine the price and availability of renovated and fixer-upper homes across America, we reviewed data on home listings from Redfin.
Cities were ranked based on the number of house, townhouse and condo listings tagged with the keyword “renovated” per 1,000 listings and the number of house, townhouse and condo listings tagged with the keyword “fixer-upper” per 1,000 listings.
We also calculated the median listing price for homes tagged with the keyword “renovated” and the keyword “fixer-upper” and ranked cities based on the percentage difference in median listing price between renovated homes and all homes, as well as the percentage difference in median listing price between fixer-upper homes and all homes.
We considered the 100 most populous U.S. cities, the most populous city in every state and state capital.
This data analysis is correct as of November 2023.
FRED. (2023). Median Sales Price for New Houses Sold in the United States. fred.stlouisfed.org
U.S. Census Bureau. (2023). Median Year Structure Built: Baltimore city, Maryland. data.census.gov
U.S. Census Bureau. (2023). Median Year Structure Built: Laredo city, Texas. data.census.gov
U.S. Census Bureau. (2023). Median Year Structure Built: Cleveland city, Ohio. data.census.gov