Photo-Illustration by Realtor.com; Photos: Getty Images (2)
Homebuyers and investors looking for the next top real estate markets should head West—to the Midwest that is.
Seven of the top 10 up-and-coming housing markets in the country are smaller cities with strong economies and more affordable homes for sale in the center of the country, according to the quarterly Wall Street Journal/Realtor.com® Emerging Housing Markets Index. The index is a look at the real estate markets that economists believe will be strong in the months ahead.
“These markets are bargains for real estate relative to other areas in the country,” says Realtor.com Chief Economist Danielle Hale. “Home prices are still high, climbing on a year-over-year basis. Mortgage rates are down from their peaks but still high. Budgets are stretched because of inflation. So buyers are looking for affordability, and they’re finding it overwhelmingly in the Midwest, South, and pockets of the Northeast.”
“These are markets where workers can find jobs if they’re looking,” says Hale.
The index identified the top markets for both buyers and investors out of the 300 largest metropolitan areas. It looks at metros with strong housing demand and rising prices combined with robust economies, lots of well-paying jobs, a good quality of life, and desirable amenities such as lots of small businesses and reasonable commutes to work. Other factors such as median days homes sit on the market before a sale, property taxes, and the percentage of foreign-born residents were also considered. (Metros include the main city and surrounding towns, suburbs, and smaller urban areas.)
Unlike last fall, not a single one of these markets was in the pricey Western swath of the nation. In fact, the top three emerging markets were all in Indiana.
The Lafayette, IN, metropolitan area about an hour northwest of Indianapolis and two hours southeast of Chicago was awarded the No. 1 spot on the list. The metro is home to Purdue University and has a robust manufacturing industry with employers like Subaru, Caterpillar, and Wabash National Corp., which makes refrigerated truck trailers among other things.
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Affordable housing is another draw. The metro’s median home list price of $299,900 in December—about $100,000 less than the national median—makes the area appealing to homebuyers as well. The good news for buyers is the number of homes for sale surged, rising 58.7% year over year. And homes are spending 20 days longer on the market in the metro. However, prices were up 33.3% in December compared with a year earlier.
About two-thirds of the shoppers looking for homes in the Lafayette metro are from other parts of the country. About half of the online traffic is from Chicago, Indianapolis, and New York City.
Hale expects demand for homes in the Lafayette area will remain strong due to its manufacturing sector.
“After the [COVID-19] pandemic, there is a focus on rethinking far-flung global supply chains,” following the delays and problems getting goods from abroad, Hale says. “The renewed attention on domestic manufacturers is going to be a trend we’ll see over the next couple of years.”
Top 20 emerging real estate markets in winter 2023
- Lafayette, IN, $299,900
- Fort Wayne, IN, $269,900
- Elkhart, IN, $247,000
- Topeka, KS, $224,900
- Johnson City, TN, $376,018
- Columbia, MO, $339,900
- Kingsport, TN, $299,950
- Savannah, GA, $399,900
- Columbus, OH, $329,450
- La Crosse, WI, $359,900
- Manchester, NH, $495,000
- Burlington, NC, $349,000
- Portland, ME, $550,000
- Knoxville, TN, $429,000
- South Bend, IN, $274,900
- Sioux City, IA, $302,475
- Springfield, IL, $162,450
- Springfield, MO, $314,900
- Milwaukee, WI, $375,000
- Rapid City, SD, $402,500
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