The real estate market has exploded this year. People have started to move from America’s largest metropolitan areas on both coasts to smaller cities with less expensive homes and what may be a better standard of living. People who can work from home are particularly interested in this option. They may never have to return to headquarters at companies that have started to downsize their offices in the anticipation the pandemic could go on for months or years. Alternatively, they may have large numbers of workers who do not have jobs that force them to be in an office.
Another major factor fueling the market is historically low mortgage rates. This allows people to buy homes at prices that they could not in a high-interest rates environment.
The surge in home buying in smaller towns has driven up prices in some of them substantially. Additionally, in some towns, especially resort towns, seasonal home demand has driven prices up and has for years.
Lending Tree examined the 50 most expensive housing markets based on median home prices and compared these to the 50 largest metro markets. What its analysts found is that small markets are not always a bargain. The small towns have populations between 10,000 and 50,000 residents. This was the primary finding:
On average, buying a home in one of the nation’s 50 most expensive towns is almost as expensive as buying a home in one of the nation’s 50 largest metros. The average of the median home prices across the towns in LendingTree’s study is $268,258. In the nation’s largest metros, the average of the median home prices is $286,046.
The most expensive small markets based on median home price were Vineyard Haven, Massachusetts ($699,500); Breckenridge, Colorado ($579,500); and Jackson, Wyoming ($549,800). It almost certainly is no coincidence that these cities have many wealthy, seasonal residents.
Vineyard Haven, on resort island Martha’s Vineyard, has median home prices more expensive than in the extremely expensive large cities. For example, the median home prices in Los Angeles and San Diego are $613,400 and $563,700, respectively.
People who want to leave large cities for a better standard of life may find that decision is very expensive.