Finding affordable housing options has become increasingly challenging, with prices climbing even in typically budget-friendly areas by the end of 2024.
According to a recent report, home prices in all of the top 50 largest cities in the U.S. saw an increase in December compared to the previous year. This widespread price growth mirrors the last significant surge observed in May 2022, when the Federal Reserve began raising interest rates from historic lows, prompting buyers to act quickly before mortgage rates escalated further.
Some cities that previously managed to escape steep price hikes are now experiencing substantial year-over-year increases in home values.
“Cities known for affordability, like Cleveland and Milwaukee, are currently witnessing double-digit price rises — this follows a substantial increase during the pandemic,” explained a senior economist in a press release.
For instance, home prices in Cleveland rose by 15% compared to a year ago, while Milwaukee saw an increase of approximately 14.5%.
Moreover, even areas that once benefited from alleviated price growth due to an influx of new housing stock have seen this trend reverse.
Data indicated that in April 2023, the Federal Reserve’s measures to control inflation led to a slowdown in home price increases, with only 19 of the top 50 metro areas showing year-over-year price rises. However, as time progressed, many consumers adapted to the higher interest rates and continued their spending habits.
Home prices surged again due to ongoing supply limitations. Between November and December 2024, average home prices soared by 6.3%, marking the most significant month-over-month rise in almost a year. In this environment, individuals waiting for prices to decline may find themselves waiting longer, often choosing to rent rather than purchase.
Several factors contribute to the ongoing supply issues: a lack of new home constructions and existing homeowners opting to stay in their properties.
While price increases are prevalent, there remain some areas where prices have not surged as dramatically. Cleveland recorded the steepest annual rise in home prices in December; however, other cities such as Philadelphia, Miami, Chicago, and Baltimore also experienced double-digit increases. Certain suburbs of New York City and Detroit recorded gains of 10% or more.
Prospective buyers looking for less price growth may consider Florida cities like Tampa, Orlando, or Jacksonville, where year-over-year price increases were under 1.5%.
Alternatively, Cleveland may still be an option; despite its recent price increase, the median sales price remains just below $230,000, which is among the lowest in the nation, following Detroit and Pittsburgh.
photo credit: money.com
