Just a few months ago, homebuyers were engaged in fierce bidding wars for homes, with prices skyrocketing well above the asking price. However, the real estate market has experienced a significant shift due to soaring mortgage interest rates, making it unaffordable for many buyers to purchase a home. As a result, home sales have declined, prices have dropped, and the number of properties for sale has increased.
But amidst this gloomy scenario, there are real estate markets that are defying the trend and continue to thrive. According to the Realtor.com® economic research team, there are several metropolitan areas where sales and prices are expected to rise in 2023. These markets offer affordable housing options and have not experienced the same level of volatility as others during the pandemic. They have a solid economic foundation and are situated near major employment hubs, making them attractive to buyers and investors.
The Top Real Estate Markets of 2023
These midsized metropolitan areas offer homes at lower prices compared to the national median. Despite the challenging market conditions, these areas have managed to maintain active sales, and buyers are still interested in purchasing properties. The presence of military installations in some of these markets ensures a constant flow of people moving in and out of the area, contributing to a vibrant real estate market.
Realtor.com Chief Economist, Danielle Hale, explains, "These are the real estate markets that are going to be more active next year. If you're a seller, it means you can expect buyers. If you're a buyer, you can expect competition. And if you're a homeowner, you can expect prices to rise, which gives you more equity in your home."
According to Realtor.com's forecast for 2023, national home prices are expected to rise by 5.4%, a departure from the excessive price increases during the pandemic. However, the number of sales is projected to decline by 14.1% next year. These top markets, in comparison, are outliers with sustained sales growth.
So, let's take a closer look at the top 10 real estate markets that will dominate in 2023:
1. Hartford, CT
Median home list price in November 2022: $372,400
Price change in 2023: 8.5%
Sales change in 2023: 6.5%
Hartford has witnessed a surge in home prices, unlike many other markets. Being the state capital of Connecticut, it is also known as the "Insurance Capital of the World," with major companies like Aetna, The Hartford, and Cigna headquartered in the area. The affordability of Hartford's real estate, combined with its proximity to cities like Boston and New York, continues to attract buyers from out of state.
2. El Paso, TX
Median home list price in November 2022: $290,500
Price change in 2023: 5.4%
Sales change in 2023: 8.9%
El Paso's real estate market benefits from the presence of Fort Bliss, a U.S. Army installation. The constant movement of service personnel and affiliated companies keeps the local housing market active. The affordability of homes in El Paso, coupled with the availability of VA loans for military buyers, makes it an attractive destination.
3. Louisville, KY
Median home list price in November 2022: $290,000
Price change in 2023: 8.4%
Sales change in 2023: 5.2%
Kentucky's largest city has emerged as a major manufacturing center, attracting homebuyers with its low home prices and cost of living. Affordable mansions and investment opportunities have made Louisville popular among buyers. The area's appeal is further enhanced by its solid job market and a steady influx of out-of-state buyers.
4. Worcester, MA
Median home list price in November 2022: $447,500
Price change in 2023: 10.6%
Sales change in 2023: 2.5%
Worcester, located just east of Boston, offers a more affordable alternative to the expensive housing market in the city. However, the market has cooled off due to increased mortgage rates, making it financially challenging for many buyers. Despite this, Worcester continues to attract first-time buyers looking for more affordable properties within their budget.
5. Buffalo, NY
Median home list price in November 2022: $239,000
Price change in 2023: 6%
Sales change in 2023: 6.3%
Buffalo, a city on the Canadian border, has experienced a steady revitalization in recent years. The availability of remote work options during the pandemic attracted more people to the area, resulting in a decrease in the number of homes for sale and an increase in prices. However, the market is stabilizing now, with prices expected to rise at a more moderate pace.
6. Augusta, GA
Median home list price in November 2022: $318,900
Price change in 2023: 5.7%
Sales change in 2023: 6.2%
Augusta, known for hosting the Masters Tournament, benefits from its proximity to Fort Gordon and the U.S. Army Cyber Center of Excellence. The affordability of homes in Augusta, combined with the turnover generated by the military base, contributes to a busy real estate market. Buyers can expect appreciation in their property values while still enjoying reasonable home prices.
7. Grand Rapids, MI
Median home list price in November 2022: $358,300
Price change in 2023: 10%
Sales change in 2023: 1.6%
Grand Rapids experienced a surge in demand during the pandemic as more local, college graduates decided to stay in the area. However, higher mortgage rates temporarily slowed down the market. Nevertheless, the real estate market is picking up again, with first-time homebuyers looking to transition from renting to homeownership.
8. Columbia, SC
Median home list price in November 2022: $300,400
Price change in 2023: 3.6%
Sales change in 2023: 7.7%
Columbia, the capital of South Carolina, is home to the University of South Carolina and a military base. The combination of affordable home prices and the presence of a strong job market attracts buyers to the area. The availability of VA and FHA loans further contributes to the stability of the housing market in Columbia.
9. Chattanooga, TN
Median home list price in November 2022: $396,500
Price change in 2023: 8.2%
Sales change in 2023: 2.9%
Chattanooga, located southeast of Nashville, has experienced a renaissance in recent years. The city's downtown revitalization, combined with its affordable real estate prices, makes it an attractive destination for startups and individuals seeking an active outdoor lifestyle. The market offers larger homes at affordable prices, appealing to buyers in search of more space.
10. Toledo, OH
Median home list price in November 2022: $161,100
Price change in 2023: 6.7%
Sales change in 2023: 4.2%
Toledo boasts the most affordable housing market on our list. Low property prices have attracted out-of-state buyers and investors to the area. While the market has slowed down compared to the peak demand experienced during the pandemic, there is still significant interest from buyers. The competitive landscape has shifted, requiring sellers to adapt and make their properties more appealing to potential buyers.
These top real estate markets of 2023 present excellent opportunities for both buyers and sellers. Affordable housing options, strong job markets, and a steady demand for homes make these markets favorable for investment and homeownership. As the real estate landscape continues to evolve, these markets are expected to flourish, providing stability and growth in the coming years.