The National Association of Realtors’ latest quarterly report revealed buyers’ search for cheaper housing led booming home price growth in Florida and other smaller markets.

Home price growth continued its breakneck pace during the first quarter of 2022, with secondary markets in Florida and elsewhere leading the charge, according to the National Association of Realtors’ latest quarterly report published on Tuesday.

Seventy percent of the U.S.’s largest 185 metropolitan statistical areas experienced double-digit home price growth in Q1 — up from 66 percent in the previous quarter. The median single-family existing-home price rose 15.7 percent year-over-year to $368,200, with the South leading the way in quarterly existing-home sales (45 percent) and home price appreciation (+20.1 percent).

Lawrence Yun | Photo credit: NAR

“Prices throughout the country have surged for the better part of two years, including in the first quarter of 2022,” NAR Chief Economist Lawrence Yun said in the report. “Given the extremely low inventory, we’re unlikely to see price declines, but appreciation should slow in the coming months.”

Midsize and small markets led the way in Q1 annual home price growth, which ranged from 27 to 34 percent. Half of the leading markets are located in Florida, including Punta Gorda (34.4 percent), Ocala (33.8 percent), Lakeland-Winter Haven (30.1 percent), Tampa-St. Petersburg-Clearwater (28.8 percent) and North Point-Bradenton-Sarasota, Fla. (28.0 percent).

Although Florida experienced the fastest home price growth in the country, California claimed the prize for the highest median home prices.

Homebuyers in San Jose-Sunnyvale-Sta. Clara ($1,875,000), San Francisco-Oakland-Hayward ($1,380,000), Anaheim-Sta. Ana-Irvine ($1,260,000) could all expect to pay well over $1 million to nab a home, while buyers in San Diego-Carlsbad ($905,000), Los Angeles-Long Beach-Glendale ($792,500) needed budgets in the high six-figures.

“Traditionally, homes in these markets were viewed as relatively inexpensive, but with recent migration trends, prices have increased significantly,” Yun said of the gains in Florida and other smaller markets across the U.S. “As more families relocate to various areas, we may see some surprising markets on our top 10 list.

“Price gains in many smaller, tertiary cities are now outpacing those in the more expensive primary and secondary markets,” he added. “This is due to buyers looking for less expensive housing and also a result of more opportunities to work from home, making relocation to smaller markets possible.”

For the upcoming quarters, Yun said booming mortgage rates will weigh heavily on homebuyers as they contend with low inventory, rising home prices and a heftier cost of borrowing.

The monthly mortgage payment on a typical existing single-family home with a 20 percent down payment rose 30 percent annually to $1,383. Families typically spent 18.7 percent of their income on mortgage payments — up 14.2 percent from Q1 2021.

The outlook was even worse for first-time buyers who paid, on average, $1,363 per month for a typical existing single-family home with a 10 percent down payment.

Although $1,363 per month is lower than a homebuyer who put 20 percent down, the fact that first-time homebuyers often have lower incomes means those payments account for 28.4 percent of their monthly budget, making homeownership unaffordable.

“Declining affordability is always the most problematic to first-time buyers, who have no home to leverage, and it remains challenging for moderate-income potential buyers, as well,” Yun said of the increasing impact of rising homebuying costs.”I expect more pullback in housing demand as mortgage rates take a heavier toll on affordability. There are no indications that rates will ease anytime soon.”

Email Marian McPherson

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