Amid the high cost of housing in 2023, it's crucial for households to consider affordability when choosing where to live. In our latest report, we dive into the top housing markets for 2023, focusing on the ten markets with the highest sales and price growth. These markets provide insights into the broader trends shaping the housing market.
Top 10 Housing Markets Positioned for Growth in 2023
- Hartford-West Hartford-East Hartford, Conn. - Ranked first with a projected sales growth of 6.5% and a price growth of 8.5%, resulting in a combined growth of 15.0%.
- El Paso, Texas - Ranked second with a projected sales growth of 8.9% and a price growth of 5.4%, resulting in a combined growth of 14.3%.
- Louisville/Jefferson County, Ky.-Ind. - Ranked third with a projected sales growth of 5.2% and a price growth of 8.4%, resulting in a combined growth of 13.6%.
Image: Realtor.com: Top 10 Markets for 2023 - list and infographic
These markets, along with the remaining seven on the list, offer a mix of local economic conditions, proximity to larger employment centers, and, most importantly, more affordable housing options. With rising housing costs and mortgage rates, buyers are increasingly drawn to these mid-sized cities that provide a better quality of life without the big-city price tag. In fact, approximately 23% of housing inventory in these top markets is affordable at the median income level, a noticeable improvement compared to other markets.
Buyers Are Expanding Their Search
The search for affordability has led buyers to expand their search beyond their current cities and even across state lines. In the third quarter of 2022, over 60% of homebuyers on Realtor.com searched for properties outside their current cities, a significant increase compared to pre-pandemic levels. The Northeast and West regions, known for their high-cost markets, dominate the list of buyers looking for affordable homes in other areas.
These trends are reflected in the demand data for the top 10 markets, where almost half of the buyers are seeking homes from other states. Factors such as lower median prices, better cost of living, and attractive job prospects make these markets highly desirable for buyers looking for a fresh start.
Not Just Pandemic-Era Hotspots
Unlike the hotspots that emerged during the pandemic, the top housing markets for 2023 have experienced lower price increases, indicating a relatively smaller affordability crunch. These markets have also seen less of a decline in sales in recent months. This combination of moderate price growth and a more stable sales market makes these markets attractive to both buyers and sellers.
Insulated from Rising Mortgage Rates
The top housing markets for 2023 are somewhat insulated from the shock of rising mortgage rates for three reasons. First, they offer more affordable housing options. Second, a higher proportion of homeowners in these markets own their homes outright. And third, these markets have a greater prevalence of government-backed loan types that offer lower down payments and slightly lower mortgage rates.
With these factors in play, the top housing markets are expected to sustain their growth and remain attractive to buyers in 2023.
Mid-Sized Metros Benefit from "Made-in-America" Trend
The top growth markets for 2023 represent a shift towards domestic industry, including manufacturing, education/healthcare, and government jobs. These mid-sized markets, which largely flew under the radar during the pandemic frenzy, offer solid job prospects without the big-city price tag. Manufacturing plays a significant role in markets like Grand Rapids and Toledo, contributing to their economic growth. On the other hand, markets like El Paso have a higher share of government employment due to the presence of military bases.
Key Stats for Top 10 Housing Markets in 2023
- Average Combined Sales & Price Change: +7.3% year-over-year
- Average Median List Price: $415,750
- Average Household Growth: +0.6% year-over-year
Conclusion
The top housing markets for 2023 provide a glimpse into the broader trends shaping the housing market. Affordability and job prospects continue to drive buyer demand, with mid-sized cities offering a better balance of cost and quality of life. These markets are not just pandemic-era hotspots; they have demonstrated resilience, affordability, and potential for growth. As the housing market evolves, these markets are poised to thrive in the years to come.
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