Home Prices

Home prices are rapidly rising in the Midwest, despite the region remaining one of the most affordable places to live.

Three Midwestern metropolitan areas — Milwaukee, Detroit and Cleveland — are among the top five metros where home prices are rising fastest in the U.S., according to a report from real-estate firm Redfin.

The biggest jump was in Milkwaukee, where the median home sales price grew 20% to $330,000 in February from a year ago, followed by nearly 13% in Detroit and 10% in Cleveland, Redfin said.

By comparison, median home prices nationwide grew 3.2% to $425,421, the slowest growth in six months.

The other two metros where home prices rose fastest were Nassau County, New York, by nearly 12%, and San Jose, Calif, which saw a jump of around 11%

Housing bargains galore

The Midwest is one of the most affordable places to buy a home: Detroit has has the lowest median sale price of any metro at $180,000 and Cleveland is the second-most affordable at $217,750.

Home prices are rising in the Midwest because there aren't enough homes for sale, which is encouraging buyers to bid higher, Redfin said.

Three of the five metros where housing supply is falling fastest are in the Midwest.

“Today’s housing market is weird. Some homes are attracting bidding wars like it’s 2020 again, while others are sitting on the market for weeks with no action,” said Desiree Bourgeois, a Redfin Premier real estate agent in Detroit, in the report. “I recently saw one house get 10 offers and sell for $50,000 over the asking price, and the buyer waived their appraisal contingency."

"Oftentimes, it’s move-in ready homes in desirable areas that draw competition,” she added.

Last year was a challenging time to sell a home. But if you thought fewer homes being sold would pull down prices, you would be mistaken.

In fact, the U.S. housing market experienced a notable surge in home prices during the fourth quarter of 2024, with 89% of metro areas witnessing an increase in single-family existing home sales prices. This marks a rise from 87% in the previous quarter, according to the latest report from the National Association of Realtors.

The national median price for single-family existing homes climbed 4.8% year-over-year to $410,100. Notably, 14% of the 226 tracked metro areas recorded double-digit annual price appreciation, a significant jump from 7% in the third quarter.

"Record-high home prices and the accompanying housing wealth gains are definitely good news for property owners," NAR Chief Economist Lawrence Yun said in a press release. "However, renters who are looking to transition into homeownership face significant hurdles."

The South led the nation with the largest share of single-family existing-home sales at 45.1%, experiencing a year-over-year price increase of 2.1%. Other regions also saw price hikes, with the Northeast up by 10.6%, the Midwest by 8.0%, and the West by 4.0%.

The Midwest dominated the list of top-performing metro areas, but Jackson, Mississippi, led the nation with a 28.7% increase in median home prices. Other notable markets included Peoria, Illinois (19.6%), and Chattanooga, Tennessee-Georgia (18.2%).

California remained home to eight of the top 10 most expensive markets, with San Jose-Sunnyvale-Santa Clara topping the list at a median price of $1,920,000.

A few metros saw lower prices

Despite the overall rise in prices, nearly 11% of markets saw declines, down from 13% in the previous quarter. Yun noted that workers with the flexibility to relocate might find more affordable housing options elsewhere.

Housing affordability showed slight improvement, with the monthly mortgage payment on a typical single-family home with a 20% down payment decreasing to $2,124, down 1.7% from a year ago. First-time buyers also saw improved conditions, with the monthly payment on a typical starter home dropping to $2,083.

A family needed a qualifying income of at least $100,000 to afford a 10% down payment mortgage in 43.8% of markets, while only 2.2% of markets required less than $50,000, consistent with the previous quarter.

Email Mark Huffman mhuffman@consumeraffairs.com

In news that may frustrate would-be homebuyers, home prices are not falling, even though sales are. In fact, they’re still going up just about everywhere.

A new report from real estate broker Redfin found that home prices rose year-over-year in all 50 of the nation's most populous metropolitan areas in December. It’s the first time that has happened since May 2022.

The December increase contrasts sharply with the previous year, when only 41 metros experienced a rise in home prices. Redfin Senior Economist, Elijah de la Campa said the last year has brought a shift, noting that traditionally affordable cities like Cleveland and Milwaukee are now witnessing double-digit price increases. 

Affordability is harder to come by

"Affordable housing havens have become harder to come by," de la Campa said in a press release, pointing out that even areas like Texas and Florida, which saw some price relief last year, are experiencing renewed price hikes. As a result, many prospective movers may turn to renting as a more affordable alternative, with rental affordability expected to improve as more supply enters the market.

The pandemic initially drove home prices to unprecedented heights due to record-low mortgage rates and heightened buyer demand. However, prices fell in 2023 when rates climbed to a two-decade high. 

By April 2023, only 19 metros saw price increases, the lowest number since 2012. Over the past year, prices have rebounded as buyers adjusted to higher mortgage rates, compounded by a shortage of homes for sale.

Price growth heading into 2025

In December, home prices recorded their most substantial gain in nearly a year, rising 6.3% year-over-year to a median of $427,670.

Cleveland led the nation with a 15% increase in median home sale prices in December, followed by Milwaukee (14.5%), Philadelphia (14%), Miami (11.8%), and Chicago (11.1%). Bonnie Phillips, a Redfin Premier real estate agent in Cleveland, reports sellers are holding firm on high price expectations, often refusing to negotiate even minor discounts. This has strained affordability, forcing many buyers to compromise on their ideal home locations.

It’s a different story in Florida, however, as metros like Tampa saw minimal price growth, with a mere 0.5% increase, the smallest among the top 50 metros. Orlando and Jacksonville followed closely with 1.3% increases, while Austin and San Antonio in Texas saw 1.5% and 1.6% rises, respectively.

The slower growth in these areas is attributed to extensive home building, which has tempered price increases, alongside subdued buyer demand due to affordability constraints and concerns over insurance and climate issues in Florida.