East Coast cities are seeing home prices rise as West Coast cities are seeing home prices fall, according to a new report. The larger question is:
Which type of homebuyer has the upper hand in this crazy market?
The U.S. is quickly seeing home prices move in opposite directions on either side of the coast — dividing the U.S. in half — as one side sees home prices rise and the other watches them fall.
In housing markets west of Texas, home prices are falling, dropping in all 12 major housing markets in the west (and then also in Austin, TX). But, in the rest of Texas and further east, the 37 largest metro areas all saw annual increases in home prices (excluding Austin).
Among the 50 largest metros in the U.S., Miami and Orlando saw the highest annual home price increases at 12% and 9.3%, respectively. This came after multiple financial companies moved to Miami in 2021 and 2022.
Here are the 10 markets that saw the largest annual home price increases from February 2020 to January 2023, according to Black Knight:
- Tampa, Florida: 59%
- Miami, Florida: 53%
- Austin, Texas: 50%
- Jacksonville, Florida: 50%
- Charlotte, North Carolina: 49%
- Atlanta, Georgia: 49%
- Nashville, Tennessee: 48%
- Orlando, Florida: 48%
- Raleigh, North Carolina: 47%
- Phoenix, Arizona: 47%
But during this past year, home prices have plummeted in the west including decreases of 10.5%, 10.3% and 7.5% in San Jose, San Francisco and Seattle, respectively.
Home prices in the west have benefitted in recent years by the tech boom that drove many homebuyers to the West Coast, but now, these same cities are seeing the greatest declines.
Housing sees a generational shift
Shifting economies is just one factor currently affecting the housing market. Another is a generational shift. Last year, for the first time in nearly a decade, Millennials were not the largest generation of homebuyers. That title belongs to the Baby Boomers, who make up about 39% of homebuyers, up from 29% last year, according to a new report from the National Association of Realtors (NAR).
This could be caused by the movement in the financial market as companies relocate out of state. NAR’s report showed young Boomers (of those ages 58 to 67) are moving the furthest distances when they move with a median of 90 miles. And when it comes to buying in more expensive markets, Baby Boomers have the upper hand.
"Baby Boomers have the upper hand in the homebuying market," said Jessica Lautz, NAR deputy chief economist and vice president of research. "The majority of them are repeat buyers who have housing equity to propel them into their dream home – be it a place to enjoy retirement or a home near friends and family. They are living healthier and longer and making housing trades later in life."
On the other end of the spectrum, older members of Generation Z (ages 18 to 23) are beginning to make their way into the housing market, making up 4% of homebuyers in 2022.
According to the survey, 88% of all buyers reported that they view a home purchase as a good investment.
Here’s how they are buying homes:
86% of all buyers purchased their homes through a real estate agent. This number was highest among younger boomers (90%) and Generation X (88%). Buyers from all generations agreed about the top reasons for using an agent: they wanted help finding the right home to purchase (49%), negotiating the terms of sale (13%) and negotiating the price (11%). Younger (14%) and older (12%) millennials were most likely to want their agent to help with paperwork. However, it should be noted that using a real estate agent is not a requirement to buy a property as an investment.
Fannie Mae predicts that home sales could remain muted for the remainder of 2023 due to rising home prices, economic instability and rising mortgage rates. It’s clear though, that housing markets in the East have not yet gotten the memo as their housing markets remain strong.
Interested in purchasing in either coasts? We are currently licensed in CO, OR, MN, TX, TN and FL and are here to support you through the home loan process. To learn more about our services, contact us here. We’d love to help you.