These Affordable Housing Markets Are Now Expensive
The days of snagging a budget-friendly home in Cleveland, Milwaukee or other affordable housing hubs around the nation might be gone for good.
New data from Redfin reveals home prices in some of these markets are climbing at breakneck speed, leaving locals and hopeful buyers scrambling for something within their reach.
Cleveland Leads the Pack
Cleveland leads the pack, with home prices surging 15% in the year leading up to December 2024 — the largest increase among the nation’s 50 biggest cities.
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Other Cities Followed Suit
Milwaukee (14.5%), Philadelphia (14%), Miami (11.8%), and Chicago (11.1%) are close behind, as double-digit price hikes hit cities once celebrated as havens for more affordable living.
Nationwide Trends
Nationwide, home prices rose in all 50 of the largest metro areas for the first time since May 2022, with the typical home now costing $427,670.
Redfin economist Elijah de la Campa explained the shift, saying, “Affordable housing havens have become harder and harder to come by; even places that saw some price relief last year, like Texas and Florida, are now seeing prices tick back up.”
Why the Shift?
Cleveland’s red-hot housing market is emblematic of this trend. Bonnie Phillips, a Redfin Premier agent in Cleveland, said, “A lot of sellers have a very specific number in mind because they saw their neighbor sell for $40,000 over the asking price during the pandemic. They’re willing to walk away if they don’t get that number, which is one factor keeping prices high.”
The Impact on Buyers
For buyers, this means dashed dreams of charming homes in sprawling suburbs.
The Future of Affordable Housing
Cities like Cleveland and Milwaukee, once considered affordable havens, are becoming inaccessible for many locals, forcing them to settle for less desirable neighborhoods.
Phillips added, “Cleveland may still have a reputation as an affordable-housing haven among out-of-staters, but not so much among locals. Many families have been priced out, and those who can still afford to buy have to move to neighborhoods they don’t really want to live in. Their dream of owning a beautiful farmhouse on 1.5 acres has shifted to a reality of a small home in an urban area.”
The Current State of Mortgage Rates
The spike in prices comes as buyers adjust to elevated mortgage rates, which currently hover around 7%. Redfin reports the combination of high borrowing costs and tight inventory is fueling the increase, even as affordability remains strained.
Contrasting Markets
Former COVID-era hotspots like Florida and Texas are seeing more modest price increases. Tampa recorded the smallest gain among major cities at just 0.5%, followed by Orlando (1.3%), Jacksonville (1.3%), Austin (1.5%), and San Antonio (1.6%).
These states have been building homes at a rapid pace, which has helped temper price growth. However, Florida’s housing market faces additional headwinds as buyers shy away, citing rising insurance premiums and climate risks.
Conclusion
The days of snagging a budget-friendly home in Cleveland, Milwaukee, or other affordable housing hubs around the nation might be gone for good. Home prices in some of these markets are climbing at breakneck speed, leaving locals and hopeful buyers scrambling for something within their reach.
FAQs
* What cities have seen the largest increase in home prices?
+ Cleveland (15%)
* Which cities have seen moderate price increases?
+ Milwaukee (14.5%), Philadelphia (14%), Miami (11.8%), and Chicago (11.1%)
* What is the current state of mortgage rates?
+ Around 7%
* Which states have seen more modest price increases?
+ Florida and Texas
* What are the main factors driving the increase in home prices?
+ Limited housing supply, sellers holding out for high prices, and buyers adjusting to elevated mortgage rates
