Image: Hartford-West Hartford-East Hartford, CT
2023 is expected to be a turning point for the real estate market. While the COVID-19 pandemic brought a sudden slowdown in many housing markets, it also paved the way for the rise of mid-sized markets. These markets, which experienced more modest price increases and maintained greater affordability, are now set to flourish. According to a report from Realtor.com, they are expected to see the strongest combined growth in home sales and listing prices in the coming year.
Housing Market Predictions for 2023
Topping the list of the 10 best real estate markets of 2023 are Hartford-West Hartford, Connecticut; El Paso, Texas; Louisville, Kentucky; Worcester, Massachusetts; Buffalo-Cheektowaga, New York; Augusta, Georgia; Grand Rapids-City of Wyoming, Michigan; Columbia, South Carolina; Chattanooga, Tennessee; and Toledo, Ohio. These mid-sized markets have been relatively stable and are likely to remain active in the coming year due to their slow and steady growth.
In these top 10 markets, home sales are projected to grow by 5.2% year over year in 2023, while national home sales are expected to decline significantly at -14.1%. Additionally, average home prices in these markets are forecasted to increase by 7.3%, compared to 5.4% nationally.
Image: El Paso, Texas
Affordability is a key factor that sets these markets apart. Danielle Hale, chief economist for Realtor.com, explains, "Because these midsize markets didn't really surge to new degrees during the pandemic, they are still relatively affordable. Nearly all of them have prices below the U.S. median home price."
In fact, affordability is significantly higher in these top markets, with about 23% of housing inventory affordable at the median income level, compared to just 17% nationally. Moreover, many of these areas went under the radar during the pandemic frenzy, making them attractive options for those seeking solid job prospects without the high price tag of big cities.
Why Choose Mid-Sized Markets?
Image: Louisville, Kentucky
The projected top markets for 2023 have a renewed focus on domestic industry and trade, representing a shift from the remote-work and tech-industry influenced homebuying trends. These mid-sized metros have a higher proportion of workers in manufacturing, government, education, and healthcare jobs compared to the 100 largest U.S. metro areas. Tech, professional services, information technology, and leisure and hospitality jobs are less common in these areas.
With solid job prospects and affordable housing options, these markets offer an attractive alternative to the mid-sized boomtowns. As remote-work opportunities continue to thrive and affordability remains a top concern for buyers, these mid-sized markets are expected to draw buyers from out of state.
Image: Worcester, Massachusetts
What About Financing?
Buyers in these top housing markets are more likely to take advantage of government-backed mortgage products, such as VA loans and FHA loans. These loans allow buyers to enter the market with lower down payments and often slightly lower mortgage rates. In the top 10 markets, the share of mortgaged sales with a VA loan was 9.4%, compared to 7.5% among all 100 markets reviewed.
Conclusion
In conclusion, the mid-sized markets are on the rise. With affordable housing, solid job prospects, and a focus on domestic industry, these markets offer a promising future for buyers in search of both quality of life and financial stability. As we bid farewell to the COVID boomtowns, we welcome the era of mid-sized market prosperity.
Image: Buffalo-Cheektowaga-Niagara Falls, New York