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Relatively affordable markets in the Midwest and East Coast are weathering economic headwinds confronting the housing market better than other markets, according to a new report from online real estate portal Redfin.
Nine out of the 10 housing markets that are holding up the best are in the Midwest or East Coast, the report found. In eight of those markets, the median price of a home is still below the national sales price.
“Homes in places like Chicago and Milwaukee certainly got more expensive during the pandemic homebuying boom, but they’re still affordable compared with the rest of the country,” said Redfin Senior Economist Sheharyar Bokhari. “They’re slow to feel the impacts of economic headwinds like inflation and the Fed raising interest rates because the relatively affordable home prices make them attractive to house hunters seeking deals, and homes are already priced low enough that there’s not much room to fall. These markets don’t have much volatility.”
That’s in contrast to the quickly falling markets on the West Coast, which had been migration boomtowns or were already expensive before the COVID-19-housing market.
Redfin’s report tracked markets that cooled down slowest from February to August. That time frame includes the run-up to the peak in home prices which occurred in June.
The report tracks year-over-year changes in prices, price drops, inventory, sales and the share of homes that sold within two weeks.
Redfin found Lake County, Illinois, a market within Chicagoland, was holding up the best of any market in the study, which looked at the 100 most populous metropolitan areas across six categories. That was followed by Albany, New York, and Chicago.
In Chicago, there were 6 percent fewer price drops on homes for sale in August than the year before.
Of the top 20 markets in the report, El Paso, Texas, was the furthest west, indicating the ongoing slowdown in the Western U.S.