The real estate market in the United States is on fire for several reasons. One is that many people have decided to relocate from the expensive cities on the coasts, particularly New York City and San Francisco. More and more people can work from home because of the effects of the COVID-19 pandemic. Some have elected to move to places they believe have a better quality of life and lower living expenses. Mortgage rates have hovered near multidecade lows as well.
Prices across the country are up by double digits. The carefully followed S&P Case-Shiller home index showed that, nationally, home prices rose 16.6% in May, compared to the same month a year ago. This is a record since Case-Shiller first published its data 20 years ago. In Phoenix, home prices rose over 20% over the same period.
Tight inventory has pushed home prices even higher. Bidding wars for homes have become commonplace in some towns. The average time a house for sale is on the market can be only a few days.
One disadvantage to the run-up in prices is that people who have lived in cities and towns for a long time are being priced out of the market by new homeowners. These residents find they may not even be able to stay. Realtor.com has just published a study about the affordability problem titled “Priced Out: 10 Hot Spots Where Locals Are Least Likely to Be Able to Afford a Home.” Explaining this new problem for local residents, Ali Wolf, chief economist at real estate research firm Zonda, commented:
Those relocating while continuing to work from home are often bringing a higher wage and some home equity with them. This has helped pushed home prices up far faster than the growth of local incomes.
The county where this problem is the worst is among the most expensive real estate markets in America. The median list price for a home in Santa Barbara County, California, is $1.7 million. From the end of 2019 to the end of 2020, that number rose by 65.5%. The change in wages for the area was only 7.6%.
Santa Barbara was followed by Gallatin County, Montana, home to Bozeman. Many people from the expensive cities on the west coast have moved there. The median price of listed homes in the county has risen 65% over the measured period to a median price of $979,900. However, the increase in wages is only 18.3%.
Here are the 10 hot spots:
- Santa Barbara County, California
- Gallatin County, Montana
- Richmond County, Georgia
- Jones County, Mississippi
- Jefferson County, Arkansas
- Belmont County, Ohio
- Potter County, Texas
- Carter County, Tennessee
- Pike County, Pennsylvania
- Watauga County, North Carolina
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