January has emerged as a prime month for renters to secure deals on apartments, and recent data from RentCafe.com revealed which cities were the hottest markets for apartment hunters. Minneapolis claimed the title of January’s most sought-after city for renters, with a 159% increase in page views from locals and renters from cities like Chicago, … [Read more…]
Even though it’s a large city, San Francisco still retains a very welcoming and neighborly vibe, and much like San Diego, New York and Los Angeles, there’s a certain charm here that draws in many new residents each year. The cost of living in San Francisco scares many off, but there are plenty of secrets to discover within this picturesque city.
All of these incredible amenities come with a steep monetary price. Even in the area’s most affordable neighborhoods, estimated monthly costs are high. In fact, the cost of living in San Francisco is a whopping 84.2 percent higher than the national average.
This is how San Francisco’s cost, as a whole, all breaks down.
San Francisco housing prices
When searching for apartments in San Francisco, you’ll face a lot of competition, even where the median rent is high. Despite the infamous San Francisco cost of living, though, people still want a San Francisco home.
As one of the hottest markets in the country, San Francisco housing is 242.3 percent above the national average. Although there are some affordable neighborhoods, many properties have an average apartment rent that’s sky-high. Not surprisingly, this greatly affects your estimated monthly costs and raises your living index. It’s also the primary reason this is such an expensive city.
To break down what this cost means, the average monthly rent for a one-bedroom in San Francisco is $3,554, up 4 percent over last year. For a two-bedroom, rent averages out to $5,007, an increase of 10 percent over last year. This is mind-boggling when you look at nearby cities like San Jose, where the average monthly rent is almost $1,000 less for both one- and two-bedroom units.
For those looking to buy, home prices vary widely depending on the neighborhood, but the median sale price in San Francisco is $1.525 million. This is up only 1.2 percent over last year, but homes often sell quickly. The median days on the market is less than three weeks.
Apartment hunting in San Francisco
Whether living a life of luxury or trying to keep things affordable in San Francisco, there’s a neighborhood for you. Even in expensive cities, you can find those hidden gems if you’re willing to look.
If you want to live in one of the more popular downtown neighborhoods like Rincon Hill and Nob Hill, prepare to pay (or find a roommate.) The average rent for a one-bedroom apartment is between $3,595 and $4,505.
For a neighborhood geared more toward young families, the average rent for a two-bed in Bernal Heights is only $2,800. For those wanting to live in California on a budget and still stay safe, the average rent for a two-bed in Outer Richmond is only $3,195.
San Francisco food prices
San Francisco is the epicenter of delicious food — more than 30 restaurants have garnered 44 Michelin stars. But, having such fantastic options does not often come cheap. Thankfully, when you’re on a budget, just go for that bread bowl, whatever is in it. In fact, you can get an entire meal at an inexpensive restaurant for $20.
For those who like to cook at home, San Francisco grocery costs are 29.8 percent higher than the national average. The data isn’t all bad, though, as this total is down by 0.6 percent compared to the past year.
Although there’s obviously variation by brand and store, there are some standard product prices that shed a light on grocery costs. For example, a dozen eggs will cost you $3.47, and a half-gallon of milk rings up at $3.55. For those who can’t get enough of that sourdough (or any kind of bread,) the average loaf will run you $4.81.
While there are plenty of locally-crafted, small-batch breweries, you’ll pay a premium price for your lager — the average six-pack is $10.19.
San Francisco utility prices
Utility rates in San Francisco neighborhoods won’t help keep your cost of living index low. While they’re 33.8 percent higher here than the national average, the saving grace is the year-round mild Bay Area weather.
As a result of the mild temperatures, there’s little need to turn on the apartment air conditioner during the summer. And during the wet winter months, a sweatshirt indoors will usually suffice. That said, the average energy bill is still high, at $275.58.
This makes utilities in San Francisco a cost of living concern, compared with most other cities. Even the companion California cities of Los Angeles and San Diego have lower utility averages.
San Francisco transportation prices
Transportation costs in San Francisco are 41.6 percent higher than the national average, which is actually 3.4 percent less than last year. The most expensive city for transportation in California behind San Fran is Oakland, San Francisco’s next-door neighbor, which has an average that’s 39.2 percent above.
What’s great about San Francisco is that the city comes with the advantage of multiple public transit options. There are the famous cable cars, the bus and rail systems and an abundance of ride-share services.
To travel in style, an iconic cable car is a great way to experience the city. Offered through San Francisco Municipal Railway (MUNI), riders can pay $8 per ride. The MUNI buses take your transportation expenses down a notch with single-ride fares at only $2.50. You can also purchase a monthly pass, which includes busses and cable car rides, for $81.
To take the train in, out and around the city, use BART (Bay Area Rapid Transport). Stops include the airport, as well as an assortment of East Bay cities. Six lines are available, with easy color-coded routes. The best way to verify the price of your one-way fare is to use the BART fare calculator. To save a little, get a Clipper Card and buy in bulk.
Thanks to its extensive public transit network, San Francisco leaves you with plenty of ways to explore where you don’t have to own a car.
Biking and walking
Biking, a popular way to get around the city, is cheap but arduous thanks to the many famously steep hills that San Francisco neighborhoods are known for. With a bike score of 77, you’ll often see bright green, bike-only lanes running next to busy streets — plus, plenty of bike-share stalls located throughout the city.
San Francisco is also ideal for walking, especially for renters in city-centric apartments. With so many amenities in proximity to area housing, this city earned itself a walk score of 93.
San Francisco healthcare prices
At 33.9 percent higher than the national average, the data says that San Francisco is an expensive market when it comes to healthcare. However, the upside to living in San Francisco is that renters do have access to some of the nation’s top doctors and treatment facilities.
It’s difficult to calculate an average for healthcare expenses, as prices are dependent on personal needs and other factors. That being said, the price for healthcare issues in San Francisco is more than in most places. Overall prices are 18.9 percent more than in Los Angeles and 26.7 percent more than in San Diego, and these other cities have their own reputations for being high-end.
Looking at medical costs in the Bay Area, a routine visit with your doctor averages out to $177.33. For an eye exam, you’ll see an average bill of $156.75 from your optometrist, while a trip to the dentist will set you back $150. These prices are without medical insurance, so the total cost could be very different depending on your plan.
San Francisco goods and services prices
Whenever your cost of living includes something you want more than you need, it’s most likely a good or service. Many of these expenses are optional, unlike housing costs, so it’s easier to keep them in check.
That said, this is an expensive item on the list. The cost of goods and services in San Francisco is 24.3 percent higher than the national average, up 2.4 percent over last year. This means you’ll most likely spend more for that movie ticket ($15), yoga class ($24.17) or a trip to the salon ($85.71) than friends in other cities.
Taxes in San Francisco
California has the highest state sales tax in the nation at 7.25 percent, and localities can add an additional tax on top of it. This makes the minimum combined sales tax rate for San Francisco 8.625 percent.
What this means is when you purchase $1,000 worth of clothing and home goods, as you browse around Union Square, you would pay $86.25 of that in sales tax.
California also has a progressive income tax, with rates between 1 percent and 13.3 percent, separated into nine brackets. Making less money means paying lower income taxes while those with a higher salary should expect to sit in the upper end of the tax bracket.
How much do I need to earn to live in San Francisco?
The price to rent a San Francisco apartment is not cheap, but it’s a huge factor in working out your own cost of living. If you’re not sure how much apartment you can afford on your annual salary, you can figure it out using our rent calculator.
You can also do a little estimating using the current standard cost of a one-bedroom apartment. The monthly rent for this unit is $3,621. If you apply 30 percent of your annual income to rent, as many experts suggest, you’d need a job that pays at least $134,720 to live on your own.
This isn’t always possible, given that the median household income in the city is $119,136. You may have to spend a little more than that 30 percent of a more average salary to live alone or consider other options. This may mean finding a monthly rent that’s lower, spending less money on those goods and services or even living with roommates. All of these options can bring San Francisco costs down and improve your own cost of living in this expensive city.
Living in San Francisco
San Francisco is full of unique beauty and charm. With its many parks, perks, great schools and happy people, this is a city for dreamers and doers — one of the best in all of California. The trick is to not let the high cost of living deter you from calling this great city home. You can do it if you watch costs carefully and budget well.
The Cost of Living Index comes from coli.org.
The rent information included in this summary is based on a calculation of multifamily rental property inventory on Rent. as of August 2022.
Rent prices are for illustrative purposes only. This information does not constitute a pricing guarantee or financial advice related to the rental market.
While the good news continues to stream in, Trulia CEO Jed Kolko delivered one piece of not-so-rosy news regarding the white-hot real estate market this morning.
He told CNBC on air (rather dramatically) that prices have finally drifted lower, with asking prices off 0.3% month over month, which he called a “big change” from previous months.
While the number itself is quite marginal on the surface, it could indicate a shift in direction for the housing market after a seemingly nonstop upward trajectory.
He noted that quarter-over-quarter numbers are also beginning to slow down, though they aren’t necessarily lower just yet.
As I said two weeks ago, it appears as if housing is beginning to cool, though it will take some time for the numbers to reflect that, seeing that there is always a data lag.
“Moment We’ve Been Waiting For”
Kolko added that home prices have been rising so much so fast lately that if they kept moving at that pace, we’d find ourselves back in bubble territory within a few years.
Still, he said prices appear to be “a little bit undervalued,” assuming you compare them to long-term income and rents.
He did admit that prices have been rising similarly to what was seen during the previous run-up, though to a “much lower level.”
Perhaps they’re constrained by a lack of easy financing, with most lenders requiring much more out of their borrowers these days, as opposed to a credit report and a “choose your own income” box.
Of course, Kolko was able to spin the slow down positively, noting that with prices finally moderating, we should be able to avoid another housing bubble and subsequent crisis.
Three Reasons for the Price Slowdown
He said three factors were at play, including higher interest rates, an increase in housing inventory, and less investor demand.
As everyone knows, mortgage rates have shot up more than 1% over the past couple months, which has dented affordability, and perhaps interest in buying a home.
Secondly, inventory has increased, partially because it has become a lot more attractive to sell a home, and because some homeowners finally have the option, now that they’re no longer underwater.
Lastly, Kolko said the higher home prices have cooled investor demand, seeing that bargains are no longer easy to come by.
The biggest price slowdowns have been in the hottest markets, which include Las Vegas, the San Francisco Bay Area, and Sacramento.
In these areas, inventory was extremely tight and investor activity was so strong that prices were propelled higher and higher.
But it appears as if momentum is finally waning, and things could get even worse if mortgage rates continue to rise, and homebuilders continue to build.
The sky isn’t falling yet, but there does seem to be a little bit of caution in the air. Of course, it’s euphoria you need to worry about it – it’s when no one believes anything is wrong when things take a turn for the worse.
Read more: Five Reasons Inventory Will Begin to Rise
For nearly two years now, hesitant buyers have been asking agents the same question: “Are we in a bubble?” We don’t think so. On today’s State of the Market podcast, real estate experts Kelly Skeval and Karen Hollands share their market predictions for 2022. After that, they discuss several investment strategies that have been proven effective in both buyer and seller markets time and again. Other topics covered include 2022’s hottest real estate markets, whether or not to raise rents during the pandemic, and why first-time home buyers have it so hard right now.
Listen to today’s show and learn:
Want to be a guest host on State of the Market? [1:34]
About Karen Hollands [2:27]
Real estate predictions for 2022 [3:15]
FSBO homes hit 40-year low [5:40]
Why Karen likes FSBO leads [7:08]
Why sellers should use an agent [10:22]
Are we in a housing bubble? [13:52]
A strong sign that we’re not in a bubble [15:27]
Karen’s experience as a landlord in New York [24:04]
Why first-time home buyers have it so hard right now [25:42]
Why Kelly isn’t raising rents for her tenants [28:19]
Smart real estate investment strategies for the younger generation [33:25]
Why Tampa will be 2022’s hottest market [35:38]
2022’s top five hottest markets (according to Zillow) [37:39]
How home preferences vary between baby boomers and millennials [39:19]
How far $1.3M will go with markets in Maine, New Mexico, and New York [41:09]
Related Links and Resources:
Thank You Rockstars! It might go without saying, but I’m going to say it anyway: We really value listeners like you. We’re constantly working to improve the show, so why not leave us a review? If you love the content and can’t stand the thought of missing the nuggets our Rockstar guests share every week, please subscribe; it’ll get you instant access to our latest episodes and is the best way to support your favorite real estate podcast. Have questions? Suggestions? Want to say hi? Shoot me a message via Twitter, Instagram, Facebook, or Email. -Aaron Amuchastegui
With the news this month that the housing market hit a milestone by showing the first year-over-year price decline in recent memory, homeowners who’d considered finally selling their home this year are finding themselves discouraged yet again.
What happened, they might wonder, to the not-so-distant glory days of frantic bidding wars and over-ask offers? Plenty of frustrated owners seem worried that the window for a fast and lucrative home sale might be shutting fast.
But here’s the reality: The U.S. housing market is no monolith. Although it’s true that many of the hottest markets of the past few years have seen prices fall in the wake of higher mortgage interest rates that broadly dampened home shoppers’ buying power, there are still cities where buyers continue to snatch up homes quickly and where sellers are getting their full asking price—or more.
This is why the Realtor.com® data team dug in to find the U.S. real estate markets that most favor sellers. (Sorry, buyers!)
The best places for sellers generally have persistently low housing inventory, strong demand from buyers, and often—but not always—lower prices that have room to swell. These are generally affordable metropolitan areas in the Northeast with a few in the Midwest.
Three of the metros on our list—Hartford, CT, Worcester, MA, and Providence, RI—are so close, you could tour homes in all of them in a single day. Our ranking also has one spot in the South and a somewhat bizarre outlier in California—more on that later.
To figure out if an area is a buyer’s or seller’s market, Pamela Ermen likes to track the change in the number of closed sales per month, compared with the change in the number of new listings per month.
“When sales are going up and inventory is going down, that’s a real seller’s market,” says Ermen, a Virginia Beach–based Realtor® at Re/Max and a speaker and coach at Real Estate Guidance.
Still, sellers who focus solely on low inventory can wrongly conclude that they can list their home at a higher price than an agent might advise. That can lead to their property languishing on the market not receiving strong offers. Meanwhile, buyers who focus only on the number of sales going down might wrongly think there’s less competition. That might result in heartache when they find out the hard way that many homes are still getting multiple offers.
To find true seller-friendly places, the Realtor.com data team looked at the May 2023 listing data for the 100 largest metropolitan areas. Then we ranked each based on the number of days that the median listing is on the market, combined with the portion of listings that have had the price reduced. These metrics tell us where homes are selling faster than average and with fewer sellers having to reduce their price to make the sale.
We selected just one metro area per state to ensure geographical diversity. (Metros include the main city and surrounding towns, suburbs, and smaller urban areas.)
Here’s where sellers can expect the market to be most tilted in their favor this summer.
Median list price: $265,000 Median days on the market: 13 Listings with a price reduction: 1 in 17
Rochester, on the western edge of New York along the southern shore of Lake Ontario, not only is at the top of our seller’s saviors list—it’s also in a class of its own. Rochester had both the lowest number of days on the market and the lowest portion of listings with a price reduction. But this is nothing new for the so-called Flower City.
The metro area has become a mainstay of the Realtor.com hottest real estate markets list. It’s also where sellers are usually still getting their asking price, and where buyers can find one of the largest selections of homes for less than $200,000. Plus, home prices are well below the national median list price of $441,500 in May.
These affordable homes have made the area appealing to locals, out-of-towners, and investors.
“If you’re priced right in our market, you can expect to still sell in about one week,” says Jenna May, a local real estate agent at Keller Williams Realty.
When the market was at its pandemic peak in 2022, and even before anyone had heard of COVID-19, Rochester was still leading the nation in the low number of days on the market. Demand here for homes is high and seems destined to stay that way.
“There are people who are offering $80,000 over listing price and not getting the home,” says May. “It’s that competitive.”
Median list price: $424,925 Median days on the market: 19 Listings with a price reduction: 1 in 14
The capital city of Connecticut is also no stranger to the Realtor.com list of the nation’s hottest real estate markets. Hartford is the largest population hub in the state, with 1.2 million residents.
It also boasts home prices that are about 5% below the national median.
“The Northeast has been well undervalued compared with other markets—and not just for years, but for decades,” says Lisa Barrall-Matt, a senior broker at Berkshire Hathaway in West Hartford.
Homes in the Hartford area have been priced $100,000 less than comparable homes in other markets, Barrall-Matt says, for so long that she began to take it for granted.
Now, she’s feeling vindicated: “I used to say, ‘Why aren’t prices higher?’ Now I’m saying, ‘Where’s the ceiling?’”
Median list price: $622,500 Median days on the market: 24 Listings with a price reduction: 1 in 13
Portland became a popular pandemic destination for Northeasterners looking for a scenic, coastal city with some great restaurants, entertainment, and a brewery scene. The area has a rich history, having a Native American presence dating more than 10,000 years before becoming an early Colonial settlement.
The above-average prices in this artsy city on Casco Bay aren’t keeping sellers from enjoying quick sales. In fact, few listings are getting marked down. The demand for housing here is just so strong. Portland has been featured on our list of the best places to retire in 2022, and it has one of the last year’s hottest neighborhoods: Windham, just on the northwestern edge of Portland proper.
Prices in Portland have grown significantly faster during the pandemic—from May 2019 to now—than they did in most of the country. Where prices rose about 40% nationally, prices in Portland have grown by about 62%. Just since this time last year, prices rose 17%.
A newer four-bedroom home in South Portland that’s within walking distance of Fore River is listed for $650,000, close to the area average.
Median list price: $517,450 Median days on the market: 19 Listings with a price reduction: 1 in 10
Worcester, about 40 miles west of Boston, was nicknamed the “Heart of the Commonwealth” because of its central location in Massachusetts.
This medium-sized metro has a name that’s fun to say, like “rooster” but with a W. But it simply doesn’t have enough homes to match the high interest from potential buyers, according to Nick McNeil, a local Realtor with the Lux Group.
“The amount of demand and the absolute lack of inventory is nuts,” he says. “And there’s not much room for new construction in this area, with tight regulations on what can be built.”
Until there’s some kind of change in the supply and demand dynamic in the area, McNeil says, it’s going to be hard for buyers, and relatively easy for sellers—as long as they’re not also trying to buy.
“The best situation you can be in is if you can sell now,” he says.
Median list price: $384,250 Median days on the market: 25 Listings with a price reduction: 1 in 10
Amid the rolling hills of Eastern Pennsylvania’s Lehigh Valley, about 60 miles northwest of Philadelphia, Allentown has a few things going for sellers right now. The portion of homes with a price reduction is about half the national average, and homes are selling about 40% faster.
Like some other places on this list, the homes in this historic steel town are priced below the national average. But local incomes are a bit higher than average, offering buyers more affordability. That’s helping the real estate market to remain competitive as buyers seek out deals.
Allentown offers a mix of urban, suburban, and rural lifestyles, making it broadly attractive for buyers.
What’s especially notable about the area is the price growth over the past several years. Allentown metro prices have risen by 78% since before the pandemic, ahead of all the other places on this list.
For about the local median price in Allentown, buyers can find a five-bedroom bungalow in the Hamilton Park neighborhood west of downtown Allentown.
Median list price: $374,950 Median days on the market: 29 Listings with a price reduction: 1 in 11
Perched on the western shore of Lake Michigan in southeastern Wisconsin, Milwaukee is known for its breweries, including Miller and Pabst. It’s also where Harley-Davidson was founded. And it’s been a staple of housing affordability for some time.
However, prices have been rising in Milwaukee’s metro area: They rose by around 11% compared with this time last year.
The median number of days on the market is below the average now, just like it was before the pandemic. The same goes for the portion of listings with a price reduction. This is all very good news for home sellers hoping for a quick, profitable sale.
For $375,000, a buyer can get a large, four-bedroom home just 5 minutes from hiking trails, a golf course, and a dog park, all along the shoreline.
Median list price: $386,973 Median days on the market: 29 Listings with a price reduction: 1 in 9
The Virginia Beach metro area, a popular vacation spot for beach, maritime history, and seafood lovers, is another place where incomes are higher than average and home prices are lower.
Last year, sellers could count on getting multiple offers, usually leading to potential buyers bidding up the price, says Virginia Beach–based Realtor Ermen. Now, it’s not as easy to figure out that pricing sweet spot. If the home is listed too high, that’s when there’s eventually pressure to reduce the price.
In the month of May, even with a low number of price reductions, Erman says, “90% of price reductions were made before the listing hit the average time on market.”
That indicates sellers are getting antsy, and probably would have been better off pricing the home lower to begin with. But homes that are priced to sell are still moving briskly.
Median list price: $1,530,000 Median days on the market: 25 Listings with a price reduction: 1 in 9
San Jose is the oddball on this list.
Nestled in the heart of Silicon Valley, it is one of the most expensive real estate markets in the nation. Homes in this San Francisco Bay Area hot spot cost more than triple the national average, which means real estate attracts a very specific buyer.
Because San Jose is a global technology hub, its population is very diverse, and not just racially or ethnically. Roughly 40% of residents were born outside of the U.S., according to the U.S. Census Bureau. Most significantly, many residents have tons of money to spend, whether they’re high-salaried tech employees or they have had an entrepreneurial startup windfall.
Local real estate agents will tell you that San Jose is simply insulated from many of the market dynamics because the clientele is so wealthy. If they’re making an all-cash purchase, they don’t have to worry about higher mortgage rates. And that’s a big boon for sellers.
Median list price: $539,950 Median days on the market: 31 Listings with a price reduction: 1 in 10
Providence, home to Brown University and the Rhode Island School of Design, is a bustling town filled with older homes. About 50 miles southwest of Boston, it’s one of the medium-sized, Northeastern metros on our list that are enjoying especially strong housing markets right now.
Providence prices are significantly above the national average, but compared with nearby Boston, where the median list price is north of $850,000, Providence is a downright bargain.
Plus, it’s got a lot going for it. It boasts beautiful scenery along the Seekonk River, a thriving arts scene, and good jobs. The headquarters for CVS is located in nearby Woonsocket.
In Providence, for $550,000, a little above the local average, buyers can find a midcentury two-bedroom home with classic brick construction about 15 minutes from downtown.
Median list price: $229,950 Median days on the market: 31 Listings with a price reduction: 1 in 9
Home prices in this Rust Belt city, which has struggled in more recent years, are still dramatically lower than the national average—about 45% less expensive. And with the focus of buyers on affordability, it’s no wonder that Toledo has taken off.
In the past year, median list prices in Toledo have risen by 25% (10% per square foot), which is quite a bit higher than before the pandemic.
For less than the median list price in Toledo, buyers can get a massive, six-bedroom home in Toledo’s Old West End neighborhood, just northwest of downtown.
The 30-year fixed-rate mortgage (FRM) averaged 6.67% this week, another decline from last week’s dip to 6.69%. This is the third consecutive week of rates declining, according to the latest Primary Mortgage Market Survey® (PMMS®) from Freddie Mac released Thursday. This week’s numbers:
30-year fixed-rate mortgage averaged 6.67% as of June 22, 2023, down from last week when it averaged 6.69%. A year ago at this time, the 30-year FRM averaged 5.81%.
15-year fixed-rate mortgage averaged 6.03%, down from last week when it averaged 6.10%. A year ago at this time, the 15-year FRM averaged 4.92%.
What the experts are saying: “Mortgage rates slid down again this week but remain elevated compared to this time last year,” said Sam Khater, Freddie Mac’s chief economist. “Potential homebuyers have been watching rates closely and are waiting to come off the sidelines. However, inventory challenges persist as the number of existing homes for sale remains very low. Though, a recent rebound in single-family housing starts is an encouraging development that will hopefully extend through the summer.” Realtor.com economist, Jiayi Xu commented: “The Freddie Mac fixed rate for a 30-year mortgage declined for the third week in a row by 2 basis points to 6.67% as markets absorbed a strong uptick in new construction. While the headline CPI dropped significantly in May to 4.0%, the core CPI— which includes goods and services excluding volatile food and energy – has not retreated as much as the overall inflation in recent months, creating a troubling situation for policymakers. Meanwhile, the Fed opted not to raise short-term rates at June’s FOMC meeting, choosing to wait for additional data and see how recent rate increases are influencing price growth and the real economy. In the coming months, we may see a faster slowdown in inflation because the growth in the shelter index, the largest contributor to inflation growth, has passed its peak and started to trend down in April. “Nevertheless, as the inflation is well-above the 2% target and the labor market is still strong, FOMC signaled that the Federal Funds rate will be half a point higher than previously expected at the end of 2023, which is also half a point higher than the current rate. In other words, borrowing, including home purchases, will likely remain expensive through the remainder of the year. With the potential for additional rate hikes ahead, mortgage rates will remain elevated throughout the remainder of the year. As a result, affordability will continue to be an important factor in buyers’ home purchasing decisions. According to Realtor.com’s recent hottest markets report, home buyers continue to flock to relatively inexpensive markets below the national median price, leading to notable price growth in these otherwise affordable areas. The heightened competition in these markets may worsen the conditions faced by buyers with financial constraints, particularly due to the already limited supply of affordable homes. While the rise in new construction is encouraging, there is a pressing need to build homes catering to all income levels. Our joint research with the National Association of REALTORS confirms this urgent necessity, especially in the lowest price tier where the shortage of affordable housing is most severe.
“However, there is still some good news for home sellers. As improving homes before selling is one of the top concerns among sellers, lower prices for household furnishings and supplies may bring a sense of relief. While this improvement primarily affects sellers, buyers may also benefit, as the high cost of home repairs are often passed on to them in the end. In May, the household furnishing and supplies index increased 4.1% over the prior year while the core inflation increased 5.3%. Compared to the previous month, prices for household furnishing and supplies dropped 0.4% versus an increase of 0.4% for core prices, on a seasonally adjusted basis.”
Of all the housing market bugaboos that haunt and frustrate wannabe buyers in this stressed, prime-time selling season of 2023 (Sky-high prices! Rising mortgage rates! Inflation and economic uncertainty!), one challenge still sits at the center of everything: finding a good home to purchase.
America’s been in a severe housing shortage since at least the earliest days of the COVID-19 pandemic, and it affects just about all else. A shortage of inventory leads to frenzied bidding wars, out-of-reach price tags, and market paralysis.
But the situation is changing, at least in some markets. And Realtor.com® decided to find out where. When it comes to home inventory levels in America, it’s both the best of times and the worst of times—it all depends on where you live.
To gain some insight into where things stand going into the crucial summer season, the data team at Realtor.com crunched the numbers to determine the metropolitan areas with the largest increases—and most substantial decreases—in available home inventory.
You can see for yourself in the table below the change in housing inventory in the 100 largest metros.
So what did we find? Well, across the country, inventory is up year over year, by a little more than 20%. But this is largely a function of the incredibly low inventory levels of the past couple of years. There aren’t more sellers coming onto the market. Instead, homes are sitting longer. And even the current bump in year-over-year inventory still puts this year below pre-pandemic levels. Nationally, the number of new listings was down 22.7% in May compared with the previous year
And the data underscores a truth that has become increasingly evident: There’s no single, monolithic housing market. Instead, real estate has become a tapestry of regional markets, each with unique patterns.
In certain regions, particularly in the more affordable pockets of the Midwest and Northeast, inventory remains tight. Despite higher mortgage rates casting a shadow over buyers and sellers alike, homes are selling at a brisk pace, prices continue to rise, and inventory remains relatively low compared with previous years.
Compare that to the West and South, where hot markets like Austin, TX, Nashville, TN, and Sarasota, FL, have seen inventory more than double compared with this time last year. These pandemic-era boomtowns have been on a roller coaster when it comes to pricing, inventory, and demand.
Nick Libert, a real estate agent with EXIT Strategy Realty in Chicago, calls this a “balanced-stagnant market.”
Elevated rates have put the brakes on the overall housing market activity, from the perspective of buyers and sellers, but a bridled demand is still very much present.
“Not a lot of people are moving,” Libert says. “Part of the reason is there’s very little to look at.”
So let’s take a look at the biggest markets to see what’s what in different parts of the country.
We found where inventory is up and down the most in the 100 largest U.S. metros by going through the Realtor.com monthly housing market data to compare inventory in May 2023 with May 2022. We selected just one per state to ensure geographic diversity. (Metros include the main city and surrounding towns, suburbs, and smaller urban areas.)
Where inventory has risen the most
1. Sarasota, FL
May 2023 year-over-year active listings change: +128.1% May 2023 median list price: $549,900
What a difference a year makes.
Located on the southwestern coast of Florida, known for picturesque white-sand beaches and barrier islands along its Gulf of Mexico shoreline, the Sarasota metro experienced the biggest year-over-year jump in inventory. There were nearly 2.3 times the number of active listings, at just shy of 4,600, this May compared with last.
Unsurprisingly, homes are sitting on the market almost twice as long, now taking about 7.5 weeks to sell.
This midsized metro, which serves as the spring training destination for the Baltimore Orioles, is relatively expensive compared with much of Florida. Median list prices are about 9% above the median state price—only Miami is priced higher.
Carissa Pelczynski, a real estate agent at Preferred Shore in Sarasota, says the attitude of many of the out-of-town buyers who were driving prices up during the pandemic has shifted in the past several months.
“People are just more hesitant now,” Pelczynski says.
Also adding to the inventory glut, according to Pelcynski: Too many sellers are pricing their homes as if the market were still as hot as it was a year or two ago. (It’s not.)
2. Nashville, TN
May 2023 year-over-year active listings change: +124.7% May 2023 median list price: $580,000
Music City is the next stop on our list, with a jump in inventory almost as large as Sarasota’s. This icon of the South is home to the Grand Ole Opry and the Country Music Hall of Fame, and it’s an increasingly popular destination for buyers.
What’s especially notable about Nashville right now is that even as inventory is more than double what it was this time last year, in May the price per square foot hit an all-time high. It surpassed the previous high mark in June 2022.
Homes in Nashville are generally larger than average, with a median size of almost 2,200 square feet. It’s also about 15% more expensive than the national median price per square foot.
A recently listed, 500-square-foot condo just southeast of downtown Nashville and within walking distance of the Cumberland River is around $515,000.This newly constructed, four-bedroom townhome is on the market for about $600,000.
Watch: The Best Cities in the U.S. for Home Sellers Right Now
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3. Austin, TX
May 2023 year-over-year active listings change: +112.5% May 2023 median list price: $583,751
It seems no list of real estate superlatives is complete without Austin. The Lone Star State’s capital city had become one of the hottest markets in the country during the pandemic, with demand—and as a result, prices—exploding. Builders raced to put up homes in the area.
But when mortgage rates rose in 2022, the Austin market was one that cooled the most, with list prices falling 15% from May 2022 to January of this year. Since then, prices have been creeping back up, now at 9% below last year’s peak.
Even as prices are back on the rise, the typical Austin home is on the market for eight long weeks before selling, compared with just two weeks during the spring 2022 pandemic pump peak.
No place on our list has a larger portion of listings that have had a price reduction, with more than 1 in 3 listings having been discounted by the seller.
The number of homes available in the Austin metro is back to pre-pandemic levels, thanks in part to the boom in new construction.
4. New Orleans, LA
May 2023 year-over-year active listings change: +81.0% May 2023 median list price: $345,000
The number of homes available in the Big Easy has earned it a place on our list, with an 81% increase.
Worth noting: By this same time last year, New Orleans inventory was already back on the rise. Measuring from the inventory low point, New Orleans has also seen the number of available homes more than double.
The inventory increase hasn’t quite put it back to pre-pandemic levels, but if the upward trajectory continues, New Orleans should reach that milestone in the coming months.
And although list prices in New Orleans haven’t been as swingy as they’ve been in a place like Austin, they have crept back up—and are now less than 1 percentage point shy of the all-time high set in March 2022.
A newly listed, midcentury boathouse on New Orlean’s iconic Lake Pontchartrain can be found for about $375,000.
5. Tulsa, OK
May 2023 year-over-year active listings change: +74.1% May 2023 median list price: $369,450
There are plenty of homes for sale in Tulsa—they just aren’t the more affordably priced properties that buyers are seeking.
“We have so much more inventory right now, and we just have less buyers,” says local real estate agent Tiffany Johnson, of Tiffany Johnson Homes.
It’s a price point game, she says. “You can’t find anything under $150,000, and anything under $300,000 is selling quickly.”
The market has shifted a lot since last year, especially for sellers who now face more competition.
“The buyers who are in the market are very serious. They will make a move quick, but they have so many houses to choose from, so [sellers and agents ] have to be almost perfect,” Johnson says. “They have to find ways to actually market these homes now.”
Rounding out the top 10 metros where the number of homes for sale has increased the most is Raleigh, NC, at 72.7%; Wichita, KS, at 59.8%; Las Vegas, at 57.5%; Greenville, SC, at 57.1%; and Omaha, NE, at 54.4%.
Where inventory is down the most
1. San Jose, CA
May 2023 year-over-year active listings change: -35.3% May 2023 median list price: $1,530,000
Topping the list of places where inventory is tightest is Silicon Valley’s San Jose. The tech hub is one of the most expensive metros in the nation, with a median price tag of $1.5 million.
Posing another hurdle for buyers: The number of homes for sale is still near record lows. The metro area, with more than 2 million people, had fewer than 1,000 homes for sale in May.
Tuan Tran, a Realtor® at Home Page Real Estate in San Jose, sees changes in this unique and wealthy home market amid turbulence in the tech business.
“Now I see a lot of investors holding back,” Tran says, adding that they are waiting to see whether a tech recession runs deeper. “Inflation is still high. Paychecks haven’t gotten much bigger.”
2. Hartford, CT
May 2023 year-over-year active listings change: -26.0% May 2023 median list price: $424,925
Hartford topped our list of markets that will dominate in 2023, and the low home inventory seems to be proving us right.
Buyers from around the Northeast have poured into the “Insurance Capital of the World,” about 90 minutes southwest of Boston and 2.5 hours northeast of New York City, due to the reasonably priced homes for sale and good jobs available.
The city has the fewest price reductions of any city, with only 1 in 14 listings with a markdown.
In another sign of the market’s strength, Hartford boasts the fastest-selling homes of any place on our list, with the typical home spending just 19 days on the market. That’s less than half the national median time of 43 days in May.
3. Milwaukee, WI
May 2023 year-over-year active listings change: -23.4% May 2023 median list price: $374,950
The housing markets in many traditionally affordable, Midwestern cities, like Milwaukee, have continued to chug along, while other pricier markets have sputtered or stalled.
In May, there were 23% fewer homes for sale than the year before. And the median home in Milwaukee is selling in 29 days, just four days more than the all-time low of 25 days in May 2022.
Another indicator of the overall strength of the Milwaukee market: The relatively small portion of homes that have had a price reduction. Only 1 in 10 is marked down.
For those considering selling in Milwaukee, the metrics suggest a quick sale, likely without a price drop, is still the norm right now. Buyers might want to consider this updated, three-bedroom, two-bathroom Cape Cod for about $225,000.
4. Dayton, OH
May 2023 year-over-year active listings change: -20.3% May 2023 median list price: $234,950
Dayton, a Rust Belt city bout an hour northeast of Cincinnati, is the most affordable of all the cities on our list, with prices 45% below the national median. The “Gem City” is home to the National Museum of the U.S. Air Force.
In contrast to what we’ve seen in the markets that got hot during the pandemic pump, prices in Dayton have been steady: no big swings up or down, but a rather steady and slight incline.
Dayton’s median listing price per square foot in May was up 6.7% year over year.
Buyers can find big deals in Dayton. This four-bedroom, 2.5-bathroom house on a third of an acre is for sale for $219,000.
5. Chicago, IL
May 2023 year-over-year active listings change: -18.5% May 2023 median list price: $376,000
The Windy City features near-record low inventory right now.
The number of available homes crept up by about 2% from April to May. But aside from the February 2022 nadir in inventory, there haven’t been this few homes on the market in Chicago in recent history. (Realtor.com listing data goes back to mid-2016.)
“Currently, what my buyers are seeing—and my sellers are experiencing—is that the north side of Chicago, along the lakefront, has, by far, the most pronounced drop,” says Libert of EXIT Strategy Realty in Chicago.
The rest of the top 10 metros with the largest decrease in inventory were Washington, DC, at -15.6%; Bakersfield, CA, at -13.2%; Albany, NY, at -13.1%; Allentown, PA, at -12.5%; and Seattle, at -10.8%.
High mortgage rates might have cooled much of America’s spring real estate market, but this is by no means true across the board. In fact, homebuyers’ search for affordable housing has made certain markets hotter than ever.
“This spring’s housing market may be sluggish nationally, but April’s hottest markets are still seeing high demand and a quick pace of sale,” says economic data analyst Hannah Jones of the latest Realtor.com® Hottest Markets List.
This list ranks cities by examining two variables: demand (measured by the number of views per listing) and pace (measured by how long listings linger for sale before getting snapped up).
The city that nabbed the top spot in April for the second time in the data’s history is Concord, NH—the state’s capital. The New England town on the Merrimack River saw homes receiving 3.8 times more views than a typical listing nationwide, and remaining on the market a mere 17 days before buyers pounced. That’s a full month less than the typical home in the U.S., which lingered for about 49 days in April.
What’s Concord got that makes it so hot? Proximity to pricier Boston (just an hour’s drive north) and one of the most tax-friendly states around with no state income or sales taxes.
The Northeast’s ‘affordability advantage’
Many markets that populate the top of this list have what Jones calls an “affordability advantage,” although that affordability is often relative.
For instance, the top two hottest markets of Concord and Manchester, NH, have median home prices ($522,000 and $533,000, respectively) above the national median of $430,000. Yet the prices are a bargain compared with the $839,000 you’d have to pay in nearby Boston (which, incidentally, ranks as the 14th hottest market and is by far the priciest on this list).
As real estate broker Pamela Young, of Re/Max Insight, who sells homes in both Concord and Manchester, puts it, “It’s nice to be able nice to travel to Boston without having to live there—or pay their taxes.”
Watch: The 3 U.S. Cities Where Rent Prices Have Dropped the Most
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Rounding out the top five hottest markets are a cluster of fellow Northeastern towns, including Hartford, CT; Rochester, NY; and Springfield, MA. (Metros include the main city and surrounding towns, suburbs, and smaller urban areas.)
In fact, adds Jones, “nine of the 12 Northeast markets on this month’s list are clustered together, generally surrounding the Boston area. Both Massachusetts and the larger New England area boast strong employment data, outpacing the U.S. in employment growth over the last year. High housing demand and tight inventory keep upward pressure on prices and, as a result, buyers are looking farther afield for affordability in the region.”
The rise of Midwest real estate
Despite their sunny climes, the West and South are stuck in a deep freeze when it comes to breaking into the hottest markets, failing to crack the top 20 list for the second month in a row. While the Northeast boasted the most markets on the list. with 12 cities, the Midwest represented the remaining eight.
Illinois and Missouri each have one hottest market on the list, and Wisconsin, Ohio, and Indiana each nabbed two spots. All of the Midwestern markets received an average of 2.5 times more views than usual and spent an average of two fewer weeks on the market.
Buyers are heading inland in the hopes that lower home prices will take the edge off today’s hefty mortgage rates, which currently average 6.39%, according to Freddie Mac.
“Overall, 13 of April’s hottest markets had median listing prices below the national median,” adds Jones.
The average listing price for these Midwestern markets was $310,000. But the lowest-priced Midwestern market is Rockford, IL, which had an average list price of $180,000, 58.1% lower than what the rest of the country saw in April.
“Buyers are out there,” says Rion Tovar-South, the designated managing broker and owner of Weichert Realtors Tovar Properties in Rockford, IL.
They are driven to Rockford by “lower taxes and more attractive home prices,” adds Tovar-South. “In addition, our agents are seeing buyers moving from the Chicago area as well as individuals that previously moved out of state moving back.”
But how long will home prices stay low?
Yet homebuyer demand in these hottest markets means available homes are disappearing fast.
“While inventory has increased 48.3% relative to last April at the U.S. level, all of the hottest markets except Fort Wayne, IN, have seen either slower inventory growth or even inventory decline,” says Jones.
“Inventory is still low in our market. We definitely need more sellers to list their homes,” adds Tovar-South. Indeed, Rockford’s inventory has dropped 23% compared with a year earlier.
And fewer homes for sale drive up competition among buyers, which can bring on bidding wars. And bidding wars lead to rising home prices as sellers see an opportunity to cash in.
Even where home prices are low, these hot markets have seen prices increase by 17.2% year over year on average. To put that percentage in perspective, consider this: It’s seven times greater than the national price growth rate of 2.5%.
“April is the ninth month in a row that the average hottest markets’ price growth climbed beyond U.S. price growth, which has been falling since June,” says Jones.
So buyers looking to snag a good deal might not want to wait too long to start shopping.
Americans’ bank accounts are under siege. Whether it’s a trip to the supermarket or a night out for dinner and a movie, the cost of just about everything seems to be on the rise.
So homebuyers are doing something about it. Frustrated by high home prices and rising mortgage interest rates, they’re increasingly seeking out more affordable places to live—like Lafayette, IN.
The Lafayette metropolitan area was named the top up-and-coming real estate market this spring, according to the quarterly Wall Street Journal/Realtor.com® Emerging Housing Markets Index. The top 20 markets are generally smaller cities offering cheap homes for sale, low costs of living, and strong job markets. The index highlights real estate markets that economists believe will be strong this year.
“We are continuing to see this shift in demand for less expensive markets, many of which are in Midwestern markets,” says Hannah Jones, an economic data analyst at Realtor.com. “They didn’t see the same kind of price growth that larger cities did during the [COVID-19] pandemic, so they maintained affordability.”
Not a single one of these real estate markets was in the West, the region with the highest home prices.
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 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 factors 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.)
The median home list price in the Lafayette metro was $289,000—about a third less than the national median of $424,000 in March, according to the most recent Realtor.com data.
The manufacturing hub of Lafayette, named after American Revolutionary War hero Marquis de Lafayette, is located about an hour northwest of Indianapolis and two hours southeast of Chicago. Big-name employers include Caterpillar, Subaru, and Wabash National Corp., which produces refrigerated truck trailers. It’s also home to Purdue University.
“Homes in Lafayette are significantly more affordable, and it has a strong economy,” says Jones.
Just two of the top 20 emerging markets—Manchester, NH, which has been consistently ranked as one of the nation’s hottest markets, and Knoxville, TN—had price tags above the national median. And just one market, Columbus, OH, the state capital and home to Ohio State University, had a population of more than 1 million.
“These are some of the only markets where locals and first-time buyers can afford to buy a home based on local salaries,” says Jones.
Top 20 emerging real estate markets in spring 2023
Lafayette, IN ($289,000 median home list price)
Bloomington, IL ($339,000)
Elkhart, IN ($275,000)
Lebanon, PA ($372,000)
Fort Wayne, IN ($339,000)
Topeka, KS ($249,000)
Sioux City, IA ($305,000)
Omaha, NE ($345,000)
Springfield, IL ($144,000)
Manchester, NH ($550,000)
Janesville, WI ($331,000)
Columbus, OH ($375,000)
La Crosse, WI ($334,000)
Johnson City, TN ($413,00)
Springfield, OH ($172,000)
Hickory, NC ($349,000)
Burlington, NC ($368,000)
Columbia, MO ($367,000)
Waterloo, IA ($263,000)
Knoxville, TN ($470,000)
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Watch: The Best Cities in the U.S. for Home Sellers Right Now
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