Location matters—and not just for your clients. A new Redfin report highlights the extent to which home price growth varies from one local market to another. Home price growth depends more on location now than it has since 2009.
From the COVID pandemic to the Great Recession, variations have significantly increased in times of boom and bust. In spring 2022—as the curtain drew on the pandemic home buying boom—metro-to-metro home price growth variations hit a 13-year high.
And while they’ve come down since then, those variations are still more pronounced than before the pandemic, thanks to cooling markets in some metros and relatively stable or even thriving markets in others.
In the Bay Area, for example, home prices are dropping by double digits, while, in South Florida, they’re climbing by double digits—creating a gap that’s close to a 30-year high.
HOME PRICE GROWTH DEPENDS ON LOCATION
The historic gap between home prices in San Francisco and Miami shows just how important it is for agents to focus on local housing market data—and not to assume national trends will match those of their area.
San Francisco home prices fell 10.1% year over year while Miami home prices rose 10.9% to a near-record high. The 21 percentage point gap between them is nearly the widest in over three decades (it reached a peak of 23 ppts in August 2022). It’s also the largest gap among all the major metros in Redfin’s analysis.
As home prices in San Francisco decline, some previously sidelined Bay Area home shoppers may finally see an opportunity to buy a home, as long as they can afford today’s mortgage rates and still-exorbitant home prices.
San Francisco home prices are in decline largely due to the exodus of remote working tech employees from the Bay Area; migration from this area more than doubled from 2020 to 2022.
Layoffs in the tech industry, along with declining tech stocks—not to mention high mortgage rates and home prices that are still the highest in the country—have driven throngs of former California residents to other parts of the country.
One part of the country seeing an influx of people is Miami, where rising home prices are making it more difficult for South Florida residents to afford a home.
Miami prices keep rising as Florida continues to attract remote workers looking for relatively affordable homes in sunny locales.
The stark difference in home-price dynamics between the Bay Area and Miami may be a reflection of a long-term, pandemic-fueled shift in where people choose to live. The fact that Miami prices are holding up well despite the national pullback in home buying suggests the relative popularity of Florida is here to stay. Even though some employees are returning to offices at least a few days a week, the pandemic has given many Americans much more freedom on where they choose to live—and a lot of them are choosing places where shelling out $1.5 million for a run-of-the-mill home isn’t the norm. Taylor Marr - Redfin Deputy Chief Economist
Bay Area home prices are still much higher than those of South Florida, but as prices fall in San Francisco and rise in Miami, the gap is shrinking—and with it the amount home buyers can save by moving across the country...
Posted by:
Sarah Lentz
May 24, 2023
