According to the Quarterly Emerging Housing Markets Index, seven of the country's top 10 emerging housing markets are smaller cities with strong economies and more affordable homes for sale in the middle of the country. The index is a look at real estate markets that economists believe will perform strongly in the coming months.
"Real estate in these markets is cheap relative to the rest of the country," said Danielle Hale, chief economist at Realtor.com." Home prices remain high and are climbing on a year-over-year basis. Mortgage rates are down from their peak, but remain high. Budgets are stretched due to inflation. As a result, buyers are looking for affordability and they are finding the vast majority in the Midwest, South and some areas of the Northeast."
"These markets are where workers can find jobs, if they are looking," Hale said.
The index identifies the top markets for buyers and investors in the 300 largest metropolitan areas. It looks at metros with strong housing demand, rising prices, strong economies, lots of good-paying jobs, good quality of life, lots of small businesses and desirable amenities such as reasonable transportation to and from work. Other factors such as the median price of a home on the market before it is sold, property taxes, and the percentage of foreign-born residents are also taken into account. (Metropolitan areas include major cities and surrounding towns, suburbs and smaller urban areas).
Unlike last fall, none of these markets are located in high-priced areas in the western United States. In fact, the top three emerging markets are all in Indiana.
Indiana's Lafayette metropolitan area, located one hour northwest of Indianapolis and two hours southeast of Chicago, was named number one on the list. The metro area is home to Purdue University and has a strong manufacturing sector with employers such as Subaru, Caterpillar and Wabash National Corp. which makes refrigerated truck trailers.
Affordable housing is another attraction. in December, the median listing price for homes in the area was $299,900, about $100,000 below the national median, which also makes the area attractive to homebuyers. The good news for buyers is that the number of homes for sale has surged, up 58.7 per cent year-on-year.
Moreover, homes in the region have been on the market for 20 days longer. However, prices in December were up 33.3% compared to a year ago.
About two-thirds of the shoppers looking for homes in the Lafayette metro area came from other parts of the country. About half of the online traffic came from Chicago, Indianapolis and New York City.
Hale expects demand for housing in the Lafayette area to remain strong due to the area's manufacturing sector.
"In the wake of the [COVID-19] pandemic, the focus has been on rethinking distant global supply chains," Hale said after delays and problems getting goods from abroad." The renewed focus on domestic manufacturers will be a trend we see in the next few years."