After a sudden downturn in many real estate markets this year, will “slow and steady” markets shine in 2023?
According to a report by Realtor.com, mid-sized markets, which have seen lower price increases and fewer affordability issues than others, are poised to see the strongest combined growth in home sales and registration prices in the coming year.
With mortgage rates nearly doubling since the start of the year and home prices continuing to rise due to low inventory, affordability remains a big concern for buyers.
“Because these mid-size markets haven’t really reached new heights during the pandemic, they’re still relatively affordable,” Danielle Hale, chief economist for Reltor.com, told USA TODAY. “Nearly all have prices below the median U.S. home price.”
Housing market forecast for 2023
At the top of the list are Hartford-West Hartford, Connecticut, followed by El Paso, Texas; Louisville, Kentucky; Worcester, Massachusetts; Buffalo-Cheektowaga, New York; Augusta-Richmond County, Georgia; Grand Rapids-Wyoming, Michigan; Columbia, South Carolina; Chattanooga, TN; and Toledo, Ohio.
“These are the markets that have been relatively slow and stable, and that slowness and stability is going to help keep real estate markets relatively active in 2023 in those areas,” Hale said.
Home sales in the top 10 markets are expected to increase 5.2% year-over-year in 2023, while domestic home sales are expected to experience a sales decline (-14.1%). Average home prices in these top 10 markets are expected to rise 7.3% compared to 5.4% nationally.
Million Dollar Mortgages:Fannie Mae and Freddie Mac will back mortgages over $1 million in 2023
Do you stop? High mortgage rates drive down sales and listings
In the top 10 markets, about 23% of housing is affordable at the median income level, compared to only 17% of affordable housing nationally.
Many of these areas flew under the radar in the pandemic frenzy and are now well positioned to bubble with strong job prospects without the price tag of big cities, Hale said.
“As many households are watching their spending closely, we expect these major housing markets to be in relatively high demand,” Hale said. “We’ve seen lower price increases, more affordability, and increased uptake of government-backed mortgage products for veterans, first-time buyers, and minorities in these key markets, providing all homebuyers with the opportunity to increase their purchasing budget.
The only metro area on the list with a median home price above the US median of $415,750 is Worcester, Massachusetts, at $447,000.
Here are some other insights from the report:
Major housing markets have not seen a pandemic boom
This year’s top 10 housing markets haven’t been as caught up in 2022’s wild buying frenzy – and price increases – as other areas. Selling prices in the 12 months to August 2022 rose 10.5% year-over-year, compared to a growth rate of 12.6% for the 100 largest cities. Major markets have also seen a lesser decline in sales in recent months, with sales down 9.1% year-over-year, compared to an average decline of 12.3% for the 100 metropolitan areas. .
Medium-sized housing markets supported by domestic industry
Representing a shift from remote working and home buying influenced by the tech industry, this year’s top markets are once again focusing on domestic industry and commerce.
On average, these mid-size metropolitan areas employ a higher proportion of workers in manufacturing, government, education, and healthcare compared to the 100 largest metropolitan areas in the United States, while jobs in the technology, professional services, information technology, and leisure and hospitality are less common in these regions. areas.
Having largely avoided the pandemic housing boom seen in other markets, homebuyers in major markets can find strong job prospects and affordable housing options.
Out-of-town buyers see these major real estate markets as an option
Nearly half of shoppers viewing the top 10 markets come from regions outside of these states. In Hartford, Connecticut, with a median price of $375,000 in October 2022, homebuyers in New York, Boston and Washington, D.C. led the wave of out-of-state views in the third quarter of 2022, finding value significant compared to not only the high house price in New York ($670,000), but also the national median ($425,000).
With remote work opportunities still strong and affordability top of mind, these marketplaces will continue to attract out-of-state buyers.
Buyers in these housing markets are more likely to take out FHA and VA loans
Home sales in the top 10 metropolitan areas also tend to benefit from more government-backed mortgage products, such as VA loans and FHA loans. Between Jan.-Aug. In 2022, the share of mortgage sales with a VA loan was 9.4% in the top 10 markets compared to 7.5% among all 100 markets surveyed. These types of loans help buyers safely enter the market with lower down payments and often slightly lower mortgage rates.
Main housing markets in 2023
1. Hartford-West Hartford, Connecticut
Median home price in November 2022: $372,000
Expected evolution of house sales in 2023: +6.5%
Expected evolution of house prices in 2023: + 8.5%
Combined sales and price evolution forecast for 2023: +15.0%
2. El Paso, TX
Median home price in November 2022: $291,000
Expected evolution of house sales in 2023: +8.9%
Expected evolution of house prices in 2023: +5.4%
Combined sales and price evolution forecast for 2023: +14.3%
3. Louisville, Kentucky
Median home price in November 2022: $290,000
Expected evolution of house sales in 2023: +5.2%
Expected evolution of house prices in 2023: +8.4%
Combined sales and price evolution forecast for 2023: +13.6%
4. Worcester, Mass.
Median home price in November 2022: $447,000
Expected evolution of house sales in 2023: +2.5%
Expected evolution of house prices in 2023: +10.6%
Combined sales and price evolution forecast for 2023: +13.1%
5. Buffalo-Cheektowaga, New York
Median home price in November 2022: $240,000
Expected evolution of house sales in 2023: +6.3%
Expected evolution of house prices in 2023: +6.0%
Combined sales and price evolution forecast for 2023: +12.3%
6. Augusta-Richmond County, Georgia, South Carolina
Median home price in November 2022: $319,000
Expected evolution of house sales in 2023: +6.2%
Expected evolution of house prices in 2023: +5.7%
Combined sales and price evolution forecast for 2023: +11.9%
7. Grand Rapids-Wyoming, Michigan
Median home price in November 2022: $358,000
Expected evolution of house sales in 2023: +1.6%
Expected evolution of house prices in 2023: +10.0%
Combined sales and price evolution forecast for 2023: +11.6%
8. Columbia, South Carolina
Median home price in November 2022: $300,000
Expected evolution of house sales in 2023: +7.7%
Expected evolution of house prices in 2023: +3.6%
Combined sales and price evolution forecast for 2023: +11.3%
9. Chattanooga, Tennessee – Georgia
Median home price in November 2022: $397,000
Expected evolution of house sales in 2023: +2.9%
Expected evolution of house prices in 2023: +8.2%
Combined sales and price evolution forecast for 2023: +11.1%
10. Toledo, Ohio
Median home price in November 2022: $161,000
Expected evolution of house sales in 2023: +4.2%
Expected evolution of house prices in 2023: +6.7%
Combined sales and price evolution forecast for 2023: +10.9%
Swapna Venugopal Ramaswamy is housing and economics correspondent for USA TODAY. You can follow her on Twitter @SwapnaVenugopal and sign up for our Daily Money newsletter here.
#hottest #real #estate #markets #goodbye #COVID #boomtowns