As home buyers enter the spring buying season, where they live will set the average home prices they will see.
A recent report by real estate analytics company Cotality points to two opposite ends of the spectrum.
“Current data reveals ‘double-speed’ housing market,” Cotality chief economist Selma Hepp said. “While low-cost areas along the coast and in the Sun Belt are recovering, the Midwest and Northeast appear to be resilient due to limited affordability and stable employment bases.”
The Northeast and Midwest are currently the nation’s top performing regions for pricing, according to Cotality.
“These states benefit from a combination of factors, including low-cost entry points, low inventory levels, and stable employment bases,” said Cotality’s principal economist. Molly Boesel he tells Realtor.com®.
The Midwest market is hot
The Midwest has solidified its position as the strongest region in the country, boasting year-over-year price growth of 3.56%, according to Cotality. Illinois, Wisconsin, and Nebraska drive that momentum.
“The Midwest benefits from the current advantage of accessibility in many areas,” it said Danielle Halechief economist for Realtor.com. “Even as home prices rise in the Midwest, they remain lower than other parts of the country.”
Boesel agrees: “In an environment with high mortgage rates, the value proposition in the Midwest continues to appeal to value-added buyers from the West and South.”
Cotality data shows home prices in Illinois increased 4.91% year over year, with a median listing price of $280,000.
“It’s probably the best market we’ve seen in downtown Chicago in five or six years,” Matt Laricymanaging broker at Americorp Real Estate in Chicago, tells Realtor.com. “There are many people who move on time [COVID-19] the epidemic returns home. Many people are leaving Florida, saying they will take the snow over the storms any time. The suburbs are getting richer, and inventory is getting thinner, so bidding wars are common there. “
Elsewhere in the Midwest, home prices in Wisconsin rose 4.78% year over year, with a median listing price of $370,000.
“Milwaukee is the epitome of a fast-paced market,” Boesel said.
In Nebraska, home prices are up 4.75% year over year, with a median listing price of $335,000.
“The Midwest has strong jobs,” Mitch Coluzzico-founder and head of architecture at SoldFast, said. “A friend of mine is moving to the Midwest from California right now, and your money is very good here. Plus, you’ve got the friendly side, too.”
The Northeast market bucks the trend
Nationwide, prices rose 0.7%. But parts of the Northeast are offsetting the broader decline.
Cotality reports that New Jersey and Connecticut remain hot—and record the highest annual appreciation in the country, both of more than 5%.
“This growth is being driven by continued demand in metropolitan areas such as Newark and Camden and a shift to more affordable packages in smaller markets where there are supply constraints,” Boesel said.
“Newark is crazy—it’s like a fairy tale,” he said Brendan Da SilvaNewark real estate agent Keller Williams. “It’s a hot spot—Lionsgate is building a movie studio here. It’s a very competitive market, with a lot of bidding wars. I put a house in Newark on the market for $750,000 last week, I got seven offers, and the highest was $850,000. It’s not stopping.”
Home prices in New Jersey increased 5.6% year over year, with a median listing price of $519,999.
Home prices in Connecticut increased 5.26% year-over-year, with a median listing price of $480,000.
“In lower Fairfield County, especially Greenwich and Stamford, the market is still very competitive,” Greenwich real estate agent. Susan Isaacof Coldwell Banker, tells Realtor.com. “Inventory remains the biggest driver. At many price points, especially under $2 million, there isn’t enough supply to meet demand. If the home is priced right, we still see lots of offers, usually all cash except emergencies.”
The lack of new construction is driving up prices
The latest Realtor.com New-Construction Insights report shows that all but one of these counties are seeing a below-average share of new construction listings.
“Furthermore, Nebraska, even though new construction is abundant, costs a whopping 58.5% premium over existing construction,” Hale said. “In other words, new homes being built are out of step with existing homes on the market, making them more of a luxury option than a relief valve for the average buyer in the market.”
The rest of the markets on the list tell a similar story, Hale said, with Wisconsin leading the way with a 50% drop in new home premiums.
Da Silva says new development in Newark remains limited, something that continues to put upward pressure on resale values.
He says: “There were only 53 newly built homes sold in Newark last year, so the market is very much driven by existing properties.”
