Two Cheapest Cities in America Are in Texas

The Lone Star State is home to low living costs, but that affordability can come at a price.

Welcome to US State of Texas - road sign
(Image credit: gguy44)

Don't mess with Texas when it comes to finding the cheapest places to live in America. The Lone Star State is home to the two least expensive cities in the U.S. From groceries and gasoline to housing and health care, the cost of living is low across the board in the South Texas cities of McAllen and Harlingen, which rank first and second, respectively, on our 2017 list of the cheapest places to live in the U.S.

There are trade-offs to affordability. Both cities have above-average unemployment, which can make it harder for residents to bring home steady paychecks, and the poverty rates are well above average versus both the state and national poverty levels. On the plus side, it's a short trip to visit Mexico or beaches on the Gulf Coast.

Intrigued? Keep reading for the lowdown on these low-cost places to live, and check out the full list of the 10 cheapest U.S. cities to live in to see the eight other cities outside of Texas that made the list.

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1. McAllen, Texas

  • Cost of Living: 23.7% below U.S. average
  • City Population: 140,269
  • Median Household Income: $44,254 (U.S.: $53,889)
  • Median Home Value: $115,400 (U.S.: $178,600)
  • Unemployment Rate: 7.8% (U.S.: 4.9%)

McAllen is about 30 miles west of Harlingen on the Rio Grande. It's a larger and relatively more prosperous city—household incomes are a full $10,000 higher than in Harlingen—yet McAllen's superlow living costs come at a price. The poverty rate is 26.1%, and obesity runs rampant. named it the fourth-fattest city in America (Jackson, Miss., is number 1). The Mexican city of Reynosa, directly across the border, has been the scene of violence between drug gangs and Mexican security forces. On the plus side, McAllen is famous for bird watching because of its location on a major migration route. The Quinta Mazatlan, a luxury birdhouse with more than 15 acres of birding habitat, is not to be missed.

2. Harlingen, Texas

  • Cost of Living: 20.6% below U.S. average
  • City Population: 65,774
  • Median Household Income: $34,466
  • Median Home Value: $80,600
  • Unemployment Rate: 7.2%

South Texas border towns are known for low costs of living, but not always for happy reasons. In Harlingen, 32.5% of residents live below the poverty line. For Texas as a whole, the poverty rate is 15.9%; for the U.S. as a whole, it's 13.5%. However, just about everything, from groceries to gasoline, costs less in Harlingen. A good cut of steak goes for 28% less than the national average (this is Texas, after all). The median home value in Harlingen is a striking $98,000 less than the U.S. median. In addition to its proximity to Mexico, Harlingen is about an hour's drive to the beaches of South Padre Island.

(The rankings are based on the Council for Community and Economic Research's Cost of Living Index, which includes 2016 price data for 288 urban areas. City-level data on populations, household incomes and home values come from the U.S. Census Bureau. Metropolitan-area unemployment rates for 2016 come from the U.S. Bureau of Labor Statistics.)

Dan Burrows
Senior Investing Writer,

Dan Burrows is Kiplinger's senior investing writer, having joined the august publication full time in 2016.

A long-time financial journalist, Dan is a veteran of SmartMoney, MarketWatch, CBS MoneyWatch, InvestorPlace and DailyFinance. He has written for The Wall Street Journal, Bloomberg, Consumer Reports, Senior Executive and Boston magazine, and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor's Business Daily, among other publications. As a senior writer at AOL's DailyFinance, Dan reported market news from the floor of the New York Stock Exchange and hosted a weekly video segment on equities.

Once upon a time – before his days as a financial reporter and assistant financial editor at legendary fashion trade paper Women's Wear Daily – Dan worked for Spy magazine, scribbled away at Time Inc. and contributed to Maxim magazine back when lad mags were a thing. He's also written for Esquire magazine's Dubious Achievements Awards.

In his current role at Kiplinger, Dan writes about equities, fixed income, currencies, commodities, funds, macroeconomics, demographics, real estate, cost of living indexes and more.

Dan holds a bachelor's degree from Oberlin College and a master's degree from Columbia University.

Disclosure: Dan does not trade stocks or other securities. Rather, he dollar-cost averages into cheap funds and index funds and holds them forever in tax-advantaged accounts.