As the nation’s prospective homebuyers respond to post-pandemic dynamics, some of the hot metros of yesteryear have lost their luster.
Lofty home prices, some of which are on the decline, have erased the attractive affordability of popular relocation markets. Destinations like Boise, Idaho, where remote workers could escape bustling metropolitan areas and find abundant outdoor recreation, became overheated and unaffordable by the summer, experts said.
“Americans left pricey coastal job centers and moved to more affordable places in the Sun Belt, but now those more affordable places are seeing affordability erode faster than anywhere else in the country,” said Taylor Marr, deputy chief economist at Redfin, in a recent report.
Mortgage rates currently above 7% may keep some prospective borrowers on the sidelines, but a record high 24.2% of homebuyers in the third quarter looked to migrate to a different metro, according to Redfin. In determining some of the trendiest markets of the coming year, affordability is the deciding factor, experts said.
“What they’re looking for is to have a bigger home, for example or to buy a home instead of renting, and this is usually related to affordability,” said Nadia Evangelou, senior economist with the National Association of Realtors.
Areas with strong local economies and large millennial populations — the nation’s largest homebuying demographic cohort — are also big indicators of hot markets, Evangelou said. Days on market remains a solid indicator of desirability, added Greg Schwartz, co-founder and CEO of fintech lender Tomo Networks. The experts suggested Sun Belt destinations like Atlanta, and cities in Florida and Texas remain popular and will be entering the traditional homebuying season strong.
Others still predict a demand shift back to big cities, where residents fled in droves to escape dense and expensive living during the pandemic. Shant Banosian, the number one-ranked loan officer at Guaranteed Rate who closed over 4,000 units last year, said he expects the shift to occur over the next 12 to 24 months, and interest in big coastal markets to revive.
“The opportunities to purchase, the acquisition costs in cities are more favorable,” he said. “And on top of that, there’s much more inventory available.”
National Mortgage News gathered insight from real estate professionals and housing market reports to determine some of the markets homebuyers will look to in 2023. Home price and migration data was gathered from Redfin.