The former 'affordable housing havens' where home prices are surging

The price of homes in former 'affordable housing havens' are skyrocketing, according to new data from Redfin. 

In Cleveland, Ohio, home sale prices rose 15 percent in the year to December 2024 - the most of any of the 50 biggest US cities. 

Milwaukee, Philadelphia, Miami and Chicago all also saw double digit increases year-over-year.   

In the year to December, home prices rose in all of the 50 most populous metropolitan areas. This is the first time this has happened since May 2022. 

The typical home in one of America's largest cities now costs $427,670, according to Redfin.

'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.'

In 2024, homes in former Covid boomtowns in these states dipped in price and sat stagnant on the market as supply greatly outweighed demand. 

Home prices soared during the pandemic as record-low mortgage rates fueled homebuyer demand.

They then fell in 2023 when mortgage rates climbed back up to a two-decade high.

But prices have recovered over the last year as buyers have grown accustomed to elevated mortgage rates. 

Despite falling slightly last fall, mortgage rates have risen back up to 7 percent. 

The average 30-year fixed-rate mortgage is 7.04 percent, according to latest data from Freddie Mac on January 16. 

Property prices are also climbing because there is a shortage of homes for sale, Redfin said. 

In Cleveland, prices rose 15 percent year-over-year in December. 

In Milwaukee, they were up 14.5 percent. They jumped 14 percent in Philadelphia, 11.8 percent in Miami and 11.1 percent in Chicago. 

Bonnie Phillips, a Redfin Premier real estate agent in Cleveland, explained some of the reasons why prices are on the up in the city.

'A lot of sellers have a very specific number in mind because they saw their neighbor sell for $40,000 over the asking price during the pandemic' she said.

They're willing to walk away if they don't get that number, which is one factor keeping prices high.'

With affordability so strained, buyers are feeling empowered to ask for discounts, she said, but they are often getting shut down by sellers, even if they are only small asks.

She continued: '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. Their dream of owning a beautiful farmhouse on 1.5 acres has shifted to a reality of a small home in an urban area.'

At the other end of the spectrum, home prices rose just 0.5 percent in the year to December in Tampa, Florida. 

This was the smallest increase among the top 50 metros. 

Next came Orlando and Jacksonville, with rises of 1.3 percent, Austin, Texas, with 1.5 percent and San Antonio with 1.6 percent.   

Although Florida and Texas are home to all five of the cities with the smallest bump in prices, this is still a marked difference from last year.  

Up until December, it was common to see home prices fall in these two states. 

Texas and Florida have been building a lot of homes, which is limiting price growth, Redfin said.

Buyer demand is also lackluster because many people have been priced out of pandemic homebuying hotspots. 

And in Florida, in particular, an insurance and climate crisis have put many house hunters on edge.