Oct 25, 2022
Forget simple curb appeal. More affordable real estate markets that offer some much-needed relief from soaring prices and punishing inflation are what’s attracting homebuyers this fall.
So where are these red-hot real estate destinations?
Look no further than Johnson City, TN, which nabbed the No. 1 spot on the latest quarterly Wall Street Journal/Realtor.com® Emerging Housing Markets Index. Residents of this small city of about 200,000, tucked into the foothills of the Appalachian Mountains, can purchase a home in the metropolitan area for about $379,000. That’s about 11% less than the national median home list price of $427,250 in September.
The emerging market’s index analyzes the 300 largest metropolitan areas each quarter, seeking to identify which will be strong in the coming months. It’s based on factors such as a thriving local economy, low unemployment, competitive wages, short commutes, and easy access to recreational activities. The index also factors in the local housing market, checking median days on the market, property taxes, and more. (Metros include the main city and surrounding towns, suburbs, and smaller urban areas.)
The index showed that homebuyers are seeking out cheaper places far from the largest cities on the coasts. Most of the top 10 were primarily in the South and Midwest, far from the larger cities on the coasts where real estate, taxes, and the overall cost of living are generally more expensive.
Every dollar counts these days as home shoppers are grappling with sharply rising mortgage rates, increasing rents, and high inflation. While the housing market is correcting and home prices have dipped a little from their peaks over the summer, they were still up about 14% year over year in September, according to the most recent data from Realtor.com. That may be changing—but not quick enough for today’s buyers.
“Compared to a year ago, home prices are still up. But winter shoppers will see lower prices than we saw this summer,” says Danielle Hale, chief economist at Realtor.com. “On top of that, shoppers in some markets may find sellers who are more willing to negotiate on price or other contract terms than they have been in recent years, especially for a home that has been on the market for a longer period of time.”
Why Johnson City reigns supreme on the emerging markets list
Home shoppers facing an increasingly hostile real estate landscape may be creating their own personal inflation-fighting plan.
Beyond competitive home prices and a low cost of living, Johnson City offers further safeguards for workers, families, and retirees alike facing today’s roiling economic uncertainty.
The town boasts a vibrant local economy with an average unemployment rate below the 3.6% national average. And major local employers such as East Tennessee State University, Johnson City Medical Center, and Ballad Health mean there are potential jobs for homebuyers coming from out of town. Typical wages in Johnson City (and other wallet-friendly metros on the list) neared $1,120 per week.
Another major draw for today’s cash-strapped home shoppers? Tennessee is one of nine states with zero income tax.
“Johnson City is attracting buyers from outside of the area, and these buyers are predominantly coming from one of two sources: high-cost metros or other, generally more expensive nearby cities,” says Hale. “Many are from major East Coast metros like New York, Washington, DC, Atlanta, or Charlotte, where the median home list price in each area exceeds $400,000.”
More than 4 out of every 5 home shoppers looking at housing stock in Johnson City are from somewhere else.
Homes spent about 42 days on the market, almost a full week less than the national average of 48 days. But it’s not just the popular Appalachian Trail that’s attracting homebuyers.
“The higher interest rates have caused many buyers to pause their search and sellers put off selling their home,” says Layla Wright, a real estate professional at Keller Williams Realty, in Johnson City. “Homes are not going much over list price, and more have to do a price reduction within a few weeks of sitting on the market.”
Homebuyers are on the move chasing affordability
The list reveals that homebuyers are casting a wide net to find an affordable home, with interstate buyers continuing to make up a majority of home shoppers.
So why will homebuyers travel far and wide? It’s simple: The cost of a monthly mortgage payment is up more than 70%from one year ago, according to Realtor.com calculations.
Aside from Johnson City, affordability drew buyers to the second and third cities on the emerging markets list. Visalia, CA, and Elkhart, IN, have median home prices of $400,000 and $257,000 respectively—both less than the national median price tag.
Meanwhile, high-priced markets in the Western region fell off the list completely this fall, further highlighting the importance of savings for homebuyers. And it’s not only more expensive markets that have gone by the wayside but smaller markets with fewer potential jobs, too.
“Even though today’s jobs market remains on solid footing, with an unemployment rate at a historically low level, some households may be preparing for the possibility of a slowdown by seeking out homes in bigger cities that offer more job options,” says Hale.
Indeed, the fall emerging markets list reveals buyers are now flocking to areas with plenty of diverse job offerings to possibly insulate themselves from a downturn in the job market.
Top 10 emerging real estate markets in the third quarter of 2022
|1||Johnson City, TN||$379,000|
|4||North Port, FL||$548,000|
|5||Fort Wayne, IN||$300,000|
Read also: https://alternativerealtor.com/10-surprising-cities-retirement/