Home prices continue to rise and now the gains are accelerating again. Short supply is the culprit in the hottest areas, keeping properties supremely pricey
But supply isn’t terribly tight everywhere; that presents some enticing new opportunities for buyers. Some of the most up-and-coming metropolitan housing markets are actually some of the most affordable. As millennials age out of their expensive rentals and seek affordable, urban homes, these new markets could heat up quickly.
“You’re going to see places like Salt Lake City, Phoenix [heat up], as well. Employers will be conscious of the cost of living and the cost of housing,” said Charlie Young, who just took over as the new CEO of Coldwell Banker.
Cleveland came in as the second-most affordable housing market, according to Coldwell Banker’s just-released annual survey of housing affordability. The average four-bedroom, two-bathroom home will cost just $73,073. Compare that to the nation’s least affordable markets, Silicon Valley’s Saratoga, where the same home will cost $2,453,718. All of the top-10 least affordable markets are in California, thanks to the tech industry, but that could soon change.
“When you go back to Saratoga and Silicon Valley and the top markets in the country in terms of cost, you see that the employers in those markets are starting to have to look to other parts of the country,” said Young.
While most of the nation’s affordable markets are in the Northeast and Midwest, they are all within commuting distance of major cities. Younger first-time buyers have been a disproportionately small share of the market during the recovery, but are starting to move back into the homebuying market. They are more mobile than move-up buyers with families, so as first-timers return new markets could become less affordable.
“I think that with anything, supply and demand helps drive pricing. When you look at this list, the United States is a very affordable housing market in general. Clearly there is a shift towards urban living by millennials,” added Young.