Housing affordability continued to be challenging last year, as home prices rose in all 50 of the most populous US metro areas in December on a year-over-year basis, according to a Redfin report. That is the first time that has happened since May 2022.
In December 2023, home prices rose in 41 metros, Redfin said. In April 2023, prices rose in just 19 metros, the lowest number since 2012.
Home prices soared during the pandemic driven by record-low mortgage rates but fell in 2023 when rates climbed to a 10-year high. As buyers have grown accustomed to elevated mortgage rates, prices have recovered and are climbing because of a shortage in inventory, Redfin said. Last month, home prices posted their biggest gain in nearly a year, jumping 6.3% year-over-year to a median of $427,670.
“Places that have long been known as affordable places to live, like Cleveland and Milwaukee, are now seeing double-digit price increases — and that’s after home prices skyrocketed during the pandemic,” said Redfin senior economist Elijah de la Campa. “Affordable housing havens have become harder and harder to come by; even places that saw some price relief last year, like Texas and Florida, are now seeing prices tick back up.”
People looking to move this year are likely to opt to rent as it is often the more affordable option, said de la Campa. In addition, rental affordability is expected to improve as more supply is delivered.
The median home sale price rose 15% in Cleveland to close out the year. This represented the largest increase among the 50 most populous metros. Milwaukee home sale prices rose 14.5%, followed by Philadelphia at 14%, Miami at 11.8% and Chicago at 11.1%.
“With affordability so strained, buyers are feeling empowered to ask for discounts, but they’re often getting shut down by sellers — even for small asks,” said Bonnie Phillips, a Cleveland-based Redfin Premier real estate agent. “Cleveland may still have a reputation as an affordable-housing haven among out-of-staters, but not so much among locals. Many families have been priced out, and those who can still afford to buy have to move to neighborhoods they don’t really want to live in.”
Tampa logged the smallest price increase year-over-year, at 0.5%. Orlando, Jacksonville, Austin and San Antonio all posted home price increases of less than 2%. Before December, home prices commonly fell in Florida and Texas as high supply has limited price growth. Tampa home prices fell 1.3% in November and Dallas home prices fell 0.6%. In Florida, the additional worry of insurance costs and weather worries have dissuaded many potential buyers, said Redfin.