The top emerging housing markets in America this fall have one key thing in common: They’re generally places where buyers can still find an affordably priced home.
The No. 1 market this fall is Topeka, KS, according to the quarterly Wall Street Journal/Realtor.com® Emerging Housing Markets Index. The capital of Kansas boasts a median home list price of just $250,000 and a low unemployment rate.
“These areas are relatively inexpensive,” says Hannah Jones, a senior economic research analyst at Realtor.com. “Inflation remains high, home prices are high, mortgage rates are high, so buyers are being hit from every angle right now. … For buyers who do need to purchase a home, it’s important that they can find one where the monthly payments are going to be reasonable.”
The index identified the top markets for both buyers and investors out of the 300 largest metropolitan areas. It looked at metros with strong housing demand based on page views of local listings, the number of homes for sale, property taxes, and median days homes sit on the market before a sale. It also factored in metros 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. (Metros include the main city and surrounding towns, suburbs, and smaller urban areas.)
With home prices back on the rise and mortgage rates nearing 8%, the budgets of many buyers have been stretched beyond their breaking points. Nationally, home prices were about 40% higher and the typical mortgage payment was 114% larger in September than just four years earlier. That’s led some buyers to seek out cheaper places to live.
“Wage growth has not kept up with inflation,” says Jones. “Homes have to be low-priced for monthly mortgage payments to be reasonable.”
Nearly all of the top 20 emerging housing markets this fall either boast low home prices or are cheaper alternatives to pricier nearby cities. Just over half of the markets were in the Midwest, with three of the top five in Indiana.
Prices in these markets, however, are rising quickly. They shot up an average of 19% year over year in September compared with 9.5% nationally. Since the COVID-19 pandemic, prices shot up 69% compared with 47% nationally.
“Many of these areas didn’t see some of the early pandemic price surges,” says Jones. “These more affordable areas are pulling in interest from out-of-area buyers. It’s highly possible that they have higher incomes and therefore may be willing to prop up that price growth, because homes are still relatively affordable compared to the U.S. as a whole.”
Buyers can still find homes priced below $200K in Topeka
In Topeka, buyers can still find a three-bedroom, two-bathroom home in the city limits for less than $200,000 if they don’t mind putting in some work, says local real estate agent Patrick Moore, of Keller Williams One Legacy Partners.
Larger, move-in ready homes in desirable suburbs are priced a bit higher, in the mid-$200,000s.
“We see a higher number of people relocating here from the West Coast and other more expensive areas,” he says. “People have figured out that living in our area is way, way cheaper. But there’s still job opportunities here, and there’s less traffic.”
Homes also cost about 40% less than in Kansas City, MO, about an hour east of Topeka.
“It’s still a pretty hot seller’s market in our area,” says Moore.
Home prices are relative
Not every home on the list was cheap. A quarter of the top 20 emerging markets had prices that were more than the national median list price of $429,500 in September.
In New Hampshire, Manchester (No. 7) and Concord (No. 8) both had prices above $500,000. But homes in these metros were a steal compared with Boston, about an hour southeast of the cities, where homes cost a median of $849,000. About 90% of views on Concord home listings were from out-of-town home seekers.
Priced-out buyers were also drawn to Worcester, MA (No. 20). The metro’s median list price was $490,000 — more than $350,000 less than in Boston, about an hour’s drive to the east.
The one outlier on the list was the Santa Maria metro, about three hours north of Los Angeles along the coast of Southern California. The wealthy area, which includes tony Santa Barbara, attracts interest from international buyers.
“Buyers in Santa Barbara may not be as impacted by the affordability constraints,” says Jones. “They may not be as worried about mortgage rates because it’s more likely they’ll be paying in cash or putting down a larger down payment.”
This story was originally published on Realtor.com, a real estate and rentals site. In addition to homes for sale, you can find rentals like Scottsdale apartments, Austin apartments, Tampa apartments, and more.
Top 20 emerging real estate markets in fall 2023
Topeka, KS ($250,000 median home list price)Elkhart, IN ($280,000)Oshkosh, WI ($317,000)Fort Wayne, IN ($312,000)Lafayette, IN ($293,000)Racine, WI ($352,000)Manchester, NH ($535,000)Concord, NH ($550,000)Columbus, OH ($380,000)Johnson City, TN ($425,000)Kingsport, TN ($325,000)Jefferson City, MO ($318,000)Springfield, OH ($200,000)Santa Maria, CA ($1,895,000)Dayton, OH ($240,000)Janesville, WI ($320,000)Canton, OH ($235,000)Knoxville, TN ($475,000)Hartford, CT ($400,000)Worcester, MA ($490,000)
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