The housing market’s meteoric rise since the onset of the pandemic has been nothing short of remarkable, but according to Thomas Ryan, Capital Economics’ property economist, the real story lies in the regional variations across the United States.
While national averages may paint a broad picture of soaring house prices, it’s the southern housing markets that are poised to “lead the pack” in terms of appreciation, Ryan suggests in a recent note. With home prices skyrocketing by 74% in Miami, 71% in Tampa, and 62% in Charlotte since December 2019, it’s clear that southern metros are experiencing an unprecedented surge in demand fueled by robust economic growth and in-migration.
Unlike their counterparts in major and midwestern metros, southern housing markets are showing no signs of slowing down. Ryan attributes this sustained growth to several factors, including the region’s thriving job markets, which continue to attract businesses due to favorable taxes and regulations. Additionally, the newfound ability to work remotely has prompted many to relocate to southern cities, drawn by their affordability compared to pricier coastal areas like Los Angeles and San Francisco.
Dallas and Atlanta, for instance, have seen above-average home price appreciation while maintaining considerably lower average home values, making them attractive options for buyers looking to maximize their purchasing power. With mortgage payments on average-priced homes remaining relatively low as a share of income in southern markets, affordability remains a key driver of demand.
Moreover, the proactive response of developers to changing migration trends has led to increased homebuilding activity in southern metros, alleviating some of the supply constraints seen elsewhere. This surge in supply, coupled with less intense competition, is expected to keep southern housing markets buoyant in the coming years, even as other regions struggle to keep pace.
While soaring home prices may benefit existing homeowners, they pose significant challenges for aspiring buyers, particularly in already unaffordable housing markets. Nevertheless, Capital Economics predicts that southern markets will continue to outperform their western and major counterparts, cementing their status as hotspots for real estate investment and growth in the post-pandemic era.
