Since interest rates have continued to rise and outsized price tags have become the pandemic-born norm, Realtor.com has introduced its 2023 Top Housing Markets forecast. Mainly concentrated in mid-size markets east of the Mississippi, with local industries tied to manufacturing, education, healthcare and government, this year’s top ten, in rank order, are Hartford-West Hartford, Connecticut, El Paso, Texas, Louisville, Kentucky, Worcester, Massachusetts, Buffalo-Cheektowaga, New York, Augusta-Richmond County, Georgia, Grand Rapids-Wyoming, Michigan, Columbia, South Carolina, Chattanooga, Tennessee, and Toledo, Ohio.
These areas have a greater share of homeowners who own their homes outright, which gives more residents equity to build on. In the top ten markets, about 23 percent of housing inventory is affordable at the median income level, compared to just 17 percent of affordable homes nationally.
“As many households keep a close watch on their spending, we expect these top housing markets to be in relatively high demand,” says Realtor.com Chief Economist, Danielle Hale. But how has this been made possible?
According to Realtor.com, the answer is fourfold. Firstly, this year’s top ten housing markets did not get as caught up in the wild buying frenzy – and price increases – of 2022 as other areas. Secondly, this year’s top markets have a renewed focus on domestic industry and trade. The pandemic exposed an Achilles heel of the far-flung supply chains that had become the norm, namely, that logistics can be disrupted by a wide array of events.
Thirdly, almost half of the buyers looking at the top ten markets are from areas outside those states. For example, in Connecticut, with a median price of $375,000 in October 2022, homebuyers from New York, Boston and Washington, DC, were leading the wave of out-of-state views in the third quarter of 2022, finding a significant value proposition, compared to the high price of houses in New York City ($670,000), as well as the national median ($425,000).
Finally, home sales in the top ten metros also tend to leverage more government-backed mortgage products such as VA loans and FHA loans, which help buyers safely enter the market with lower down payments and lower mortgage rates.