Home Prices Defy Expectations, Continue to Climb in 2024
Despite the deterrent of high mortgage rates, home prices in most major US cities have shown remarkable resilience, posting significant gains in 2024. According to recent data, the median home price in the 50 largest US cities has surged by 5.8% through November, compared to the entire previous year.
California Cities Lead the Charge
Anaheim, California, has emerged as the top performer, with a staggering 12.5% increase in home prices. This phenomenon can be attributed to its proximity to Los Angeles, where expensive homes are driving buyers to seek more affordable options in surrounding areas. Similar trends are observable in other metropolitan areas near major cities, such as Newark and Nassau County near New York.
Fastest-Growing Metro Areas
Here are the 15 metro areas that have witnessed the fastest home price growth so far in 2024:
- Anaheim, CA
- Newark, NJ
- Nassau County, NY
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The Perfect Storm: Limited Housing and Growing Demand
Anaheim’s housing market has been plagued by a persistent shortage of homes, which is expected to worsen due to a growing population. Furthermore, developers have been catering to above-moderate-income families, exacerbating the affordability crisis. This limited housing supply, coupled with growing demand, has driven up prices in the region.
Northeastern Cities Feel the Pinch
The Northeast is also experiencing a housing crunch, particularly in Newark, New Brunswick, and Nassau County near New York City. Remote work and high living costs are prompting buyers to seek more affordable, commuter-friendly suburbs, leading to increased demand and rising prices.
Exceptions to the Rule
San Antonio and Austin, Texas, stand out as exceptions, with home prices remaining relatively flat. In contrast, Rust Belt cities like Milwaukee, Detroit, and Cleveland, known for their affordability, are witnessing increased demand as buyers seek lower-cost alternatives outside more expensive markets.
The Bottom Line
Despite the challenges posed by high mortgage rates, demand, especially from wealthier buyers, has outpaced limited housing supply, pushing prices higher despite slower sales. This trend is particularly pronounced in large cities, home to many of the nation’s wealthiest residents. As the housing market continues to evolve, one thing is clear: the demand for affordable housing remains a pressing concern.
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