Want To Save $150K on a Home? Here’s the One Place Where These Bargains Are Hiding Today
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America’s hottest markets might have a few reigning champs, but some serious competition in the Midwest is nipping at their heels.
The Realtor.com® Hottest Markets List reveals that the average home listing price for December’s 20 hottest real estate markets was $313,000—about 21.8% lower than the national median as buyers increasingly sought out affordability. (The rankings factor in a combination of demand—measured by the number of unique views per home listing—and how quickly homes are selling in that area.)
Manchester, NH, about an hour northwest of Boston, took the No. 1 spot for the 16th time in the past 22 months. Rochester, NY, not far from the U.S.-Canadian border, also maintained a strong showing on the list, coming in second in the rankings. But these Northeastern hot-market heavyweights might not stay in the lead for long.
Homebuyers seeking deeper discounts are now finding them in the mighty Midwest.
Ten of December’s hottest markets were smack dab in the middle of the country in states such as Ohio, Wisconsin, Illinois, and Kansas—where median list prices hovered at a mere $245,000, more than $150,000 lower than the national median.
While Midwestern markets have always made a strong appearance in the hottest markets list, the region started to dominate the rankings in spring 2022. That’s when mortgage rates crested 5% and tacked on hundreds of dollars to homebuyers’ monthly mortgage payments.
So what’s a home shopper who’s feeling financial pressure from all sides to do? Take out an affordability calculator and run the numbers. What home shoppers discovered is the savings in these Midwestern markets were significant.
Mortgages rates drive homebuyers to the mighty Midwest
Though median home list prices fell from June’s high of $450,000 to $400,000 in December, higher mortgage interest rates erased much of those savings. Mortgage rates more than doubled last year, ending the year in the low- to mid-6% range for 30-year fixed-rate loans, according to Freddie Mac. That made monthly mortgage payments uncomfortably high for many buyers.
“Buyers have to factor in how higher interest rates affect their monthly payment and set their budget accordingly,” says Hannah Jones, an economic data analyst at Realtor.com. “We continue to see high demand in affordable locales because they are among the areas that, despite price growth, are still within the realm of possibility for many buyers.”
Plus, buyers were being squeezed by high inflation. Even the most basic goods jumped in price: The cost of eggs spiked 60% over the same 12 months.
All of this has made the real estate deals in the Midwest more appealing than ever.
“The typical buyer in one of these markets is looking at a home payment that is $755 [38.8%] lower than the home payment on the median-priced U.S. home,” says Jones. (The savings number is based on a 20% down payment for both homes at today’s mortgage rate of 6.15% and does not include insurance and taxes.)
Why Ohio is a bargain hunter’s paradise
The Midwest’s hottest state in December was Ohio, with five locales on the list: Columbus, coming in third, followed by Dayton, Akron, Canton, and Cincinnati.
“If a house goes up, it sells,” says Jan Leverett, real estate agent at Irongate Inc. Realtors in Dayton. “Inventory is still low. So homes in good shape are still selling on the first day, though without the bidding wars of the past.”
Leverett credits Dayton’s hot market not just to affordable homes that average $214, 900, but also to a strong economy powered by jobs at Wright-Patterson Air Force Base.
Nearby Akron (No. 10) and Canton (No. 12) stand out for offering homes for sale priced below $200,000.
And so does neighboring Illinois, which had two metros with properties priced below $200,000. Springfield (No. 9) was the least expensive market, with home prices averaging $162,450.
And buyers don’t just save money by moving to the Midwest. They’re also landing “spacious homes in areas with robust economies,” adds Jones.
The West is finally warming up
America’s Western markets were nowhere to be seen on the hottest markets list since May 2022. But one metro finally crept back in just before the year came to a close.
Billings, MT (No. 19), broke in, offering homes with a median list price of $470,000. And while that’s far above the Midwest price tag, Billings offers buyers “bang for their buck with spacious homes in a beautiful setting,” says Jones.
“Homes in Billings were priced only slightly higher per square foot, but were almost 25% larger, on average, than the typical U.S. home for sale in December,” adds Jones. “Additionally, both the median listing price and median listing price per square foot were lower than last December, offering budget-constrained buyers more options.”
So if you’re thinking about going West, you might want to move quickly. The hottest markets receive 1.5 to 2.7 times the number of viewers per home for sale compared with the national rate. And while the average home spent 67 days on the market in December, properties in Billings were snatched up in 58 days.
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