You probably can’t afford the top emerging housing market in America.
The No. 1 market is Santa Maria, CA, where the typical home costs a cool $1.8 million, according to the quarterlyWall Street Journal/Realtor.com® Emerging Housing Markets Index. The metro includes tony Santa Barbaraand Montecito, both of which are located about an hour and a half north of Los Angeles, along the California coast.
“This is a tale of two housing markets,”saysHannah Jones, senior economic research analyst for Realtor.com.
Besides Santa Maria, the rest of the metropolitan areas on the list were located in generally less expensive regions or were cheaper alternatives to pricier, nearby cities. That makes sense as list prices that have surged in recent years and high mortgage rates have made homeownership increasingly unaffordable.
Sixteen of the top 20 markets in the ranking boasted median home list prices under the national median of $410,000. Eight had median price tags below $300,000.
However, prices in these markets are still rising quickly. In December, prices jumped 11.8% year over year in the top 20 markets, according to the report. Nationally, prices ticked up only 1.2% over the same period.
“We’re seeing the continued popularity of these low-cost locales,” says Jones. “Despite the fact that these metros have seen prices climb a lot, they’re still relatively affordable.”
The index identified the top markets for both buyers and investors out of the 300 largest metropolitan areas. It looked at metros with strong housing demand based on page views of local listings, the number of homes for sale, property taxes, and the median days homes sit on the market before a sale. It also factored in metros with robust economies, lots of well-paying jobs, a good quality of life, and desirable amenities such as lots of small businesses and reasonable commutes to work. (Metros include the main city and surrounding towns, suburbs, and smaller urban areas.)
Buyers are drawn to scenic Santa Maria—despite the high price
During the COVID-19 pandemic, home prices fell in Santa Maria. But buyers, lured by views of the Santa Ynez Mountains and the Pacific Ocean, have since driven prices right back up.
In December, the median list price was 48.1% higher than the year prior. This helped the market jump from 14th place on the list last quarter to the top spot this quarter.
At this price, many buyers might not be as concerned with higher mortgage rates because they’re offering larger down payments or paying in all cash. Or they might be able to cover the larger monthly mortgage payments.
About 3.3% of those looking at homes in the Santa Maria area were from other countries, more than double the percentage of foreign buyers looking at the rest of the markets on the emerging markets list.
“The pricey California housing markets saw a big dip over the last couple of years as homes got really expensive. People were looking to move somewhere they could get more bang for their buck,” says Jones. “Housing demand has picked up in the area [primarily with] buyers from other pricey California metros.”
Those buying homes in the Santa Maria metro are often from Silicon Valley’s San Jose, San Francisco, and Los Angeles, where high price tags are the norm.
Buyers are seeking cheaper alternatives
Three of the Northeastern metros on the list—Concord, NH; Manchester, NH; and Portland, ME—had median home prices that were higher than the national price tag in December.
But these markets were still relative bargains compared with nearby Boston, where the typical home was sold for $800,000 in December. All three metros were within an hour or two of Beantown.
“We’ve seen the continued popularity of these big-city-adjacent markets,” says Jones.
Top 20 emerging real estate markets in fall 2023
- Santa Maria, CA ($1,795,000 median home list price)
- Jefferson City, MO ($302,000)
- Canton, OH ($230,000)
- Racine, WI ($334,000)
- Oshkosh, WI ($295,000)
- Springfield, OH ($200,000)
- Lafayette, IN ($310,000)
- Columbus, OH ($360,000)
- Johnson City, TN ($370,000)
- Fort Wayne, IN ($300,000)
- Concord, NH ($575,000)
- Elkhart, IN ($260,000)
- Rockford, IL ($200,000)
- Kingsport, TN ($319,000)
- Akron, OH ($215,000)
- Topeka, KS ($227,000)
- Toledo, OH ($175,000)
- Portland, ME ($600,000)
- Manchester, NH ($550,000)
- Reading, PA ($317,000)
