The housing market remains tough for many Americans, both buyers and sellers. Soaring inflation, low inventory, and ever-rising home prices all make the dream of homeownership harder to achieve.
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As for home prices, they have been rising across the country for the past few months and the trend shows no signs of slowing.
According to the National Association of Realtors (NAR) Existing Home Sales Report released June 21, the median home price rose to $419,300 in May, up 5.8% over the past year, “setting an all-time high and marking the 11th consecutive month of year-over-year price increases.”
According to Freddie Mac, mortgage interest rates have been hovering around 7%, with the average rate for a 30-year mortgage falling slightly to 6.87% as of June 20.
Rising home prices and rising mortgage rates are creating tough times for the housing market and weighing on sales activity, Daniel Hale, chief economist at Realtor.com, said in a statement on the NAR report. Moreover, with the Fed reducing the number of interest rate cuts it plans to implement this year, Hale noted that “it may be too late for some first-time homebuyers who saw an opportunity to lower their rent prices, which are a contributing factor in lower homeownership rates for younger families.”
Given this backdrop, which housing markets are rising?
“The hot market for the end of 2024 and the next few years is home affordability,” said Dottie Herman, vice chairman and former CEO of Douglas Elliman Real Estate. “That’s the primary motivator for individuals and families to move. Affordable housing equals demand, and small and mid-sized cities and markets are attracting millennials, the largest group of Americans buying homes.”
Herman added that cities and surrounding areas in the South and Southwest are seeing a large influx of residents from other states where prices are too high.
“Even Midwestern Rust Belt cities that were all but forgotten after losing manufacturing jobs are seeing real estate values ​​rise,” she said. “When jobs come back, workers move in and the local economies bounce back, which drives prices up.”
Hale of Realtor.com agreed with the premise that prices are expected to continue to rise in 2024, providing more affordable housing to homebuyers.
She said Realtor.com’s May Hottest Markets report and data shows prices are expected to rise in three metro areas.
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1. Raleigh Cary, North Carolina
Hale said tight supply and above-average page views helped the market rise 89 spots in the rankings to 127th.
“Raleigh is the most expensive of these markets, with an average price of $462,000,” she said, adding that price per square foot increased 4.4 percent.
Meanwhile, Hale noted that Raleigh-Cary shoppers will see an increase in homes for sale (+14.6%) and an increase in the overall number of homes for sale (+28%), but homes continue to sell quickly.
“They stayed on the market for just 32 days in May, down 12 days from a year ago and 13 days faster than the U.S. overall,” she added.
Other experts echoed that sentiment, including Kevin Leibowitz, president and CEO of Grayton Mortgage, who said North Carolina appears to have “the most momentum.”
“We’ve done quite a bit of business in the Raleigh area and the market has been strong since we entered in 2018,” he said. “Price ranges are generally lower than more expensive markets like California and New York, making them more attractive to a wider range of buyers.”
2. Philadelphia, Pennsylvania
The market rose 86 places in the rankings to 101st out of 300 countries, driven primarily by higher-than-average demand and supply constraints compared to the U.S.
Hale also noted that Philadelphia’s median home price of $382,000 is affordable for a major coastal market, making it the cheapest of these markets.
“This has kept the Philadelphia market attractive, with the median listing price increasing 9.3 percent year-over-year and the average price per square foot increasing 8.3 percent as well,” she said.
As a result, Philadelphia buyers will see more homes for sale (+8.5%) and an increase in the total number of homes for sale (+8.4), but homes continue to sell quickly, she added.
3. Chicago, Illinois/Naperville, Indiana/Elgin, Wisconsin
The market rose 67 spots in the rankings to 63rd out of 300 markets, the highest ranking of the three, Hale said.
“The affordable median home price of $400,000 helps the Chicago area stand out,” she said. The median price is up 6.3% compared to a year ago, and the typical price per square foot is up 6.9% as well.
For Chicago buyers, there aren’t as many homes for sale (-3.9%) compared to a year ago, but the total number of homes for sale is still up slightly (+4%) even as homes continue to sell quickly, she said.
“Chicago was the fastest moving of the three markets, with homes in the market spending just 25 days in May, down nine days from a year ago and 19 days faster than the U.S. overall,” Hale added.
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This article originally appeared on GOBankingRates.com: 3 Housing Markets That Will Increase in Value by the End of 2024
