With affordability a current driver for both housing demand and supply, some analysts expect Midwest housing markets to draw buyers’ attention in 2023.
CONYERS, Ga. – Single-family home and condo prices peaked in May. Buyers are looking for bargains after the boom.
You’re undoubtedly well aware that housing prices have fallen in recent months, but did you know that condo prices are dropping less than single-family home prices?
The median single-family home price crested at a record high of $452,518 in May and then slid 8.5% to $414,000 in October, according to a study from Point2 looking at the biggest 100 U.S. cities. The firm is a real estate price information service.
The median condo price hit an all-time peak of $341,457 in May and then dipped 4.5% to $326,000 in October.
So why the disparity in pace of decline?
“When the pandemic forced everyone to cram their entire life inside their homes, spacious, single-family homes (preferably with a backyard) became a must,” the study said. “Consequently, homebuyers went into a real house-hunting frenzy, jump-starting a period of bitter bidding wars and rapidly escalating asking prices.”
Bargain-hunting for condos
But now buyers are searching for better bargains. “After demand for space drove house prices to historic highs, making them totally unattainable, homebuyers started shifting their attention toward the more affordable option – condos,” the study said.
Single-family home prices decreased in 88 of the 100 largest U.S. cities from May to October, while condo prices descended in just 65.
On the single-family home side, Irving, Tex. led the decline with a 22% drop, followed by Toledo, Ohio at 20% and Los Angeles and San Francisco at 18%.
On the condo side, Stockton, Cal. paced the descent at 29%, followed by Raleigh, N.C. at 25%, New Orleans at 23% and Glendale, Ariz. and Omaha, Neb. At 21%.
On the upside, Oklahoma City led condos with a 79% gain, followed by Tampa at 40%, San Antonio at 29% and Louisville and Nashville-Davidson at 14%.
For single-family homes, Tulsa, Okla. was No. 1 with a rise of 11%, followed by Lubbock, Tex. at 4%, and Albuquerque and Miami at 3%.
Shift to the Midwest
Meanwhile, during the housing boom that raged from the beginning of the pandemic in early 2000 until May, the Sun Belt led the way. People were attracted to the warm weather, reasonable prices at the beginning of the boom and the lack of a state income tax in Texas and Florida.
But next year, things are going to change, according to a commentary from Zillow, the real estate information service.
“As affordability has become the key driver of both supply and demand in the market, places that still feature reasonable prices are already seeing momentum shift their way, and should have the healthiest housing markets in 2023,” Zillow said.
That means the Midwest. “Unlike nearly every other region in the U.S., prices in most Midwest metro areas haven’t run up to extremes,” the firm said. “Mortgage costs as a share of income are still within healthy, sub-30% levels across Ohio, Pennsylvania, Kansas, upstate New York, Iowa and smaller metros, in Illinois, which will allow first-time buyers to take the plunge.”
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