As affordability relief is expected in 2024 due to a slow decline in sale prices and mortgage rates, Realtor.com® has identified the top local housing markets across the U.S. that are ready for growth. These markets are predicted to see the most substantial combined increase in home sales and listing prices in the coming year.
The top 10 markets are mainly located in Southern California, the Northeast, and the Midwest. In rank order, they are Toledo, Ohio; Oxnard-Thousand Oaks-Ventura, Calif.; Rochester, N.Y.; San Diego-Chula Vista-Carlsbad, Calif.; Riverside-San Bernardino-Ontario, Calif.; Bakersfield, Calif.; Springfield, Mass.; Worcester, Mass.-Conn.; Grand Rapids-Kentwood, Mich.; and Los Angeles-Long Beach-Anaheim, Calif.
Most of these markets offer relative affordability compared to the national median home price – particularly those in the Midwest and Northeast. In California, where five of the top 10 metro areas are located, markets are forecast to rebound from a challenging 2023, despite sales levels remaining historically low.
New research from Realtor.com® reveals that almost half of first-time home buyers (49%) think buying is a better option than renting in 2024, and three-quarters (76%) believe achieving homeownership is still possible. First-time home buyers looking to purchase a home in the next 12 months have been saving for slightly over two years on average, putting away around $800/month. Almost all of them (95%) feel they’ll afford a home within their lifetime, with 40% saying they’ll afford it within the next year.
Sales price growth in the nation’s largest 100 metropolitan areas is expected to surpass the national average in 2024. Median sales prices in these areas are expected to rise by an average of 1.2%, compared to a 1.7% decline nationwide. Home sales in the 100 biggest markets will decrease an estimated 2.2%, while nationwide, sales will remain relatively stable (+0.1%).
Midwestern and Northeastern top markets are more affordable, with all top five markets except for Worcester, Mass., showing median listing prices lower than the national average. In these areas, 37.9% of homeowners live in homes without a mortgage, which protects them from the impact of higher interest rates. Their local economies are driven by education, healthcare, and manufacturing, which are projected to have strong job growth to keep unemployment below the estimated national average of 4.2% at the end of 2024.
Five of this year’s top 10 metro areas are in Southern California, projected to perform better than the state as a whole. These markets will see estimated average sales growth of 13.1% in 2024, compared to a sales decline of 4.1% for other California areas in the top 100. While sales will be higher than in 2023, sales in the top five California markets are still 20%-35% lower than in a typical year before the pandemic in 2017-2019. These markets are more sensitive to shifts with mortgage-rate changes, given that only 31.6% of homeowners in these Southern California markets don’t have a mortgage.
In Northeastern and Midwestern top markets, housing market growth could be at risk if unemployment rises above expectations, or if dominant sectors including education, healthcare, manufacturing, and government see weak job creation. In California, growth in home sales in the top five markets will depend on a gradual easing of mortgage rates to a predicted 6.5% by the end of 2024. If inflation takes longer to temper and mortgage rate declines stall or reverse, those markets could see home sales flatten or dip.
Overall, the real estate landscape in 2024 presents opportunities for buyers and sellers alike. By staying informed about market trends, monitoring interest rates, and considering regional factors, individuals can make well-informed decisions in this ever-evolving market.
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