{"id":165958,"date":"2024-02-05T14:23:38","date_gmt":"2024-02-05T21:23:38","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=165958"},"modified":"2024-02-28T10:07:56","modified_gmt":"2024-02-28T17:07:56","slug":"where-home-prices-grew-the-most-in-2023","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/where-home-prices-grew-the-most-in-2023","title":{"rendered":"Where Home Prices Grew the Most (and the Least) in 2023"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm\/?e=BIGPOC9245614825\" width=\"100%\"><\/iframe>\r\n  \n\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">As everyone knows by now, rising interest rates and low supply have been the most significant factors shaping the real estate market since 2022.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The Federal Reserve began raising key interest rates in March 2022 in response to skyrocketing inflation. Following the pandemic-era sharp rises in the cost of materials and products across several industries, inflation in the immediate aftermath shot to its highest levels in 40 years. To tackle these high inflation rates, the Fed raised rates 11 times between March 2022 and July 2023, from almost zero to 5.5%.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">These interest rate hikes ended the era of historically low&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/what-is-a-mortgage\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">mortgage<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;interest rates. Typical rates ranged between 3.4% for a 15-year fixed mortgage and 4.2% for a 30-year fixed mortgage in February 2022. By October 2023, rates topped 8%\u2014the highest since 1971. Mortgage rates did begin coming down by the end of 2023 after several months of the Fed deciding to hold key rates and not raise them any further.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The soaring interest rates, in combination with a heavily depleted inventory and high home prices, created an inhospitable environment for buyers. The result: As of December 2023, home sales activity dropped to its lowest level in 28 years, according to&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.nar.realtor\/newsroom\/existing-home-sales-slid-1-0-in-december\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">newly released data from the National Association of Realtors (NAR)<\/span><\/a><span data-preserver-spaces=\"true\">.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">What Market Conditions Have Meant for Home Prices in Different Regions<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">From an investor\u2019s perspective, this level of pressure on the housing market translates into a worry about the market eventually caving in and home values falling off a cliff. This hasn\u2019t happened, and home prices have continued to grow in many parts of the country, seemingly against all odds.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">However, there is a concrete reason why home prices are continuing to grow despite the interest rate hikes: pent-up demand going back to the beginning of the pandemic that cannot be satisfied by current limited inventory. So, the real estate market as a whole was still defined by growth in 2023. As of December 2023, the median home price in the U.S. was $382,600, up 4.4% from $366,500 in December 2022.&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">National averages like these typically conceal the regional realities of the real estate market. It is always more accurate (and more useful for investors) to talk about real estate markets. We pulled data and averaged the median sales price of the top 100 markets in the U.S. from 2022 and 2023 and compared them to find year-over-year growth rates. The results show strong regional disparities consistent with post-pandemic regional market trends.<\/span><\/p>\n\n\n<div style=\"min-height:1156px\"><script type=\"text\/javascript\" defer src=\"https:\/\/datawrapper.dwcdn.net\/b9Jho\/embed.js?v=1\" charset=\"utf-8\"><\/script><noscript><img decoding=\"async\" src=\"https:\/\/datawrapper.dwcdn.net\/b9Jho\/full.png\" alt=\"\" title=\"\"><\/noscript><\/div>\n\n\n\n<p class=\"wp-block-paragraph\"><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/on-the-market-145\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Affordability<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;was the single most important factor in buyers\u2019 decisions from at least the middle of 2022 when mortgage rates first began climbing. It was, of course, a huge factor before that, too, and drove pandemic-era migration patterns, including the by-now infamous Sun Belt boom that saw cities like Austin, Texas, and Phoenix experience unprecedented increases in demand.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Notably, Austin and Phoenix both recorded substantial home price growth decreases in 2023, according to our data set. Austin\u2019s home price growth rate decreased the most, by 11.31%, while the home price growth rate in Phoenix was reduced by 4.62%.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The changing circumstances and behavior of buyers are behind these figures. During the pandemic, the buyers\u2019 search for affordable places to live, at least in some instances, came from the increased mobility that came with&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/the-real-world-impacts-on-remote-work-and-what-it-did-for-investors\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">remote working<\/span><\/a><span data-preserver-spaces=\"true\">. People felt that suddenly they had more choices in where to live and work. Phoenix and Austin were such attractive destinations because they are desirable cities in warm climates that were, at least pre-2021, affordable.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">What\u2019s driving buyers now is a much more acutely felt need to just be able to afford a home. In many cases, people are now moving out of areas they can no longer afford, as opposed to moving to areas that will offer them a better overall deal. The relative decline of Sun Belt destinations makes complete sense in the context of this narrative\u2014as does the steady rise of affordable and semi-affordable metro areas in the Midwest, Northeast, and South.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">For many people, it is now a very clear-cut issue of moving somewhere they can afford, where they can get a decent job. Places like Syracuse, New York; Hartford, Connecticut; Knoxville, Tennessee; and Miami are offering people just that. All four recorded positive home price growth rates of over 8%, with Syracuse emerging as the leader at 9.11%. New York had the most destinations, with a positive home price growth rate, and Syracuse, Rochester, and Buffalo all making the top 10.<\/span><\/p>\n\n\n<div class=\"flourish-embed flourish-chart\" data-src=\"visualisation\/16632499\"><script src=\"https:\/\/public.flourish.studio\/resources\/embed.js\"><\/script><\/div>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The state that suffered the most declines in home price growth? California, with three metro areas making it into the top 10 cities that experience home price growth rate decreases:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong><span data-preserver-spaces=\"true\">Stockton:&nbsp;<\/span><\/strong><span data-preserver-spaces=\"true\">-3.8%<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Sacramento:<\/span><\/strong><span data-preserver-spaces=\"true\">&nbsp;-4.26%<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">San Francisco:<\/span><\/strong><span data-preserver-spaces=\"true\">&nbsp;-6.25%<\/span><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">It is clear by now that parts of California are increasingly unaffordable to the average buyer through a combination of sky-high home prices, high local unemployment rates, and an overall high cost of living. The recent increases in mortgage rates acted as tipping points for these markets. They were already in trouble following the unsustainable pandemic-era growth; now they\u2019re experiencing the fallout.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">What the Market Might Do Going Forward<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">A lot depends on when\u2014and if\u2014the Fed decides to start cutting rates. But that\u2019s only half of the equation. The other half is the long-standing problem with a limited inventory. Even if mortgages become more affordable, if inventory remains at its current levels, home prices are most likely to keep behaving as they are now, with rapid growth in currently affordable areas where there is very high demand and sluggish growth in areas that already peaked as affordable destinations.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">NAR\u2019s Chief Economist Lawrence Yun is optimistic, commenting in the press release: \u2018\u2018The latest month&#8217;s sales look to be the bottom before inevitably turning higher in the new year. Mortgage rates are meaningfully lower compared to just two months ago, and more inventory is expected to appear on the market in upcoming months.\u2019\u2019<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Final Thoughts<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">We think that it will be a while before the current real estate market patterns shift in a meaningful way. Even with mortgage rates coming down slightly in the past couple of months, inventory is unlikely to expand substantially.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">It\u2019s important to remember that a lot of the sellers who aren\u2019t putting up their homes for sale are also potential buyers who don\u2019t want to or cannot deal with the new reality of high mortgage rates. It is highly likely that current first-time buyers will continue their diligent search for homes in affordable areas\u2014and they will be prepared to pay a premium to realize the dream of homeownership.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Investors take note: Be aware of what \u2018\u2018affordable\u2019\u2019 means for your region and where it is\u2014that\u2019s where all the real estate action will be happening this year.<\/span><\/p>\n\n\n\n<div class=\"wp-block-group has-slate-200-background-color has-background\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<h2 class=\"wp-block-heading has-text-align-center has-theme-slate-dark-color has-text-color\">Take Your Market Research to the Next Level<\/h2>\n\n\n\n<div class=\"wp-block-media-text has-media-on-the-right is-stacked-on-mobile is-vertically-aligned-center\" style=\"grid-template-columns:auto 34%\"><div class=\"wp-block-media-text__content\">\n<p class=\"has-theme-slate-dark-color has-text-color wp-block-paragraph\">Need help finding the right market for your next investment? Dave Meyer created our brand new <strong>Picking a Market Worksheet<\/strong> to help investors like you identify and analyze the right locations for their next deals. <\/p>\n\n\n\n<p class=\"has-theme-slate-dark-color has-text-color wp-block-paragraph\">Download our worksheet today for quick and easy analysis when researching your next market.&nbsp;<\/p>\n\n\n\n<div x-data=\"frictionlessSignupForm()\" class=\"button-account-type alignleft\">\n\n  \n\n  <!-- Guest Button -->\n      <template x-if=\"!$store.wp.isMember()\">              <button x-on:click=\"$store.wp.displaySignupPrompt()\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\">Sign Up to Download<\/button>\n          <\/template>  \n  <!-- Free Member Button -->\n      <template x-if=\"$store.wp.isMember() &#038;&#038; !$store.wp.isPaidMember()\">              <a href=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/02\/Picking-a-Market-Worksheet_v2.pdf\" target=\"_blank\" x-on:click=\"window.analytics.track(&#039;Blog | Market Intelligence | Picking a Market Worksheet&#039;, {\n            referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/where-home-prices-grew-the-most-in-2023&#039;,\n            account_type: &#039;free&#039;,\n          });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\">Download the Worksheet<\/a>\n          <\/template>  \n  <!-- Pro Member Button -->\n      <template x-if=\"$store.wp.isPaidMember()\">      <a href=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/02\/Picking-a-Market-Worksheet_v2.pdf\" target=\"_blank\" x-on:click=\"window.analytics.track(&#039;Blog | Market Intelligence | Picking a Market Worksheet&#039;, {\n          referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/where-home-prices-grew-the-most-in-2023&#039;,\n          account_type: &#039;pro&#039;,\n        });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\">Download the Worksheet<\/a>\n    <\/template>  \n  <!-- Frictionless Popup -->\n  <\/div>\n<\/div><figure class=\"wp-block-media-text__media\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"1024\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/01\/Picking-A-Market-1024x1024.jpg\" alt=\"picking a market worksheet\" class=\"wp-image-165579 size-full\" title=\"\"><\/figure><\/div>\n<\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>The U.S. as a whole only grew by about 1% last year, but other markets saw huge gains and massive losses. From New York City to Jackson, Mississippi, we analyzed the 100 largest metros in the nation and measured their home price growth from 2022 to 2023.<\/p>\n","protected":false},"author":613618,"featured_media":165963,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7119,7381],"tags":[],"class_list":["post-165958","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-biggerpockets-daily","category-housing-prices"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/165958","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613618"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=165958"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/165958\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/165963"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=165958"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=165958"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=165958"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}