It’s no secret the current state of the market has made homebuying a real challenge for most. High prices, high mortgage rates, and low supply have put a lot of strain on potential buyers. With these challenges, where should homebuyers look to buy, and where should they avoid?
SmartAsset’s new report examined housing price growth from May 2022 to May 2023 and ranked 532 housing markets from most to least expensive to help potential buyers evaluate their best options when it comes to housing.
The top 5 most expensive markets:
- Palo Alto, California at a median price of $3,161,541
- Newport Beach, California at a median price of $2,948,043
- Sunnyvale, California at a median price of $1,833,813
- Mountain View, California at a median price of $1,816,963
- Redwood City, California at a median price of $1,681,132
The top 5 least expensive markets:
- Flint, Michigan at a median price of $47,498
- Detroit, Michigan at a median price of $64,414
- Jackson, Mississippi at a median price of $67,254
- Decatur, Illinois at a median price of $82,878
- Camden, New Jersey at a median price of $99,580
Other key highlights:
- America’s 10 most expensive housing markets are in California. Thirty-five California cities have an average home price over $1 million. And homes in top-ranked Palo Alto average more than $3 million. East coast cities, by contrast, don’t crack the top 70.
- The top 70 most expensive housing markets all decreased in price. On average, the most expensive housing markets declined by 6.4% since last year. The vast majority of these markets were in California, with Washington making a handful of placements.
- Home prices in San Francisco dropped 13% over the last year. This was the second-biggest drop after a 15% decrease in rental prices in Dublin, California. Homes in San Francisco average 1.2 million, while prices in New York City average $700,000. In the last year, NYC home prices have increased by 3%—less than the average 4.05% inflation rate at the same time.
- The average home price in Florida is $394,000, 5% higher than last year. Weston, Florida has the most expensive homes at $670,000, followed by Miami ($553,000). Lauderhill had the highest price increases on the average home, with prices growing 15% between 2022 and 2023.
- Texas home prices increased only by 1% year over year. If you’re a hopeful homebuyer, that’s good news. But, if you’re a current homeowner, your home didn’t keep up with inflation this year. The average home price in Texas as of May 2023 came in at $315,000. Frisco and Austin had the highest home prices at $662,000 and $567,000, respectively. Home prices in Austin dropped by more than 8%.
- Home prices increased by more than 10% since last year in these cities. Hartford, Connecticut homes got 20% more expensive over the last year, more than any other city. Deerfield Beach, Florida; Fayetteville, North Carolina; Camden and Trenton, New Jersey; Warner Robins and Savannah, Georgia; Brownsville and Tyler, Texas; and Iowa City, Iowa all saw large home price increases. Every one of these areas has an average home price lower than $300,000.
“With home prices increasing by 20% or more in some places and decreasing by 15% or more in others just over the last year, the home-price volatility of the last few years is settling asymmetrically,” said Jaclyn DeJohn, managing editor of Economic Analysis for SmartAsset and author of the report.
For agents with potential buyers struggling in the current market, DeJohn advises them to go over the following options with their clients:
- Consider the benefits of renting. If you’re thinking buying a home, renting may actually be the better financial option.
- Shop around for interest rates. Be sure to shop around for the best possible rate and do your due diligence before picking a lender.
- Talk with an advisor. A financial advisor can help you set a budget, save for a down payment and ensure your home purchase aligns with your overall financial plan.
For the full report, click here.