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After years of pandemic-related disruption, the U.S. housing market now appears to be settling into a new normal that favors the Midwest and Northeast and which tips the scales against western tech hubs — a trend that suggests the so-called Great Reshuffling may be ending.
That’s the takeaway from a new Redfin report, out Monday, which reveals that “pandemic migration hotspots are cooling more rapidly than other parts of the U.S.” as mortgage rates remain elevated. The report specifically points to Austin, Texas, as the fastest-cooling market over the last year. In addition to rates, the report also states that housing in tech hubs is cooling thanks to layoffs among tech companies, tumult amid the tech sector’s stocks, low housing inventory, and recent price gains that were unsustainable.
After Austin, the fastest cooling markets include Seattle, Phoenix, Tacoma in Washington state, and Denver. Four cities in the top ten — Stockton, San Jose, Sacramento and Oakland — are located either in California’s Bay Area or in the immediately adjacent region.
The report goes on to note that metro areas such as Austin became pandemic-era “boomtowns” as new residents poured in from more expensive coastal cities. But such places are now “doing an about-face as rates rise.”
While the once-surging West and Sunbelt have seen their markets cool, the Midwest and Northeast are now rising. Though the report describes the overall U.S. market as “faltering,” it notes that Hartford, Connecticut, is “holding up best.”
“In Hartford, the housing market isn’t necessarily hot — pending sales dropped 16 percent year over year in February and new listings also dropped by double digits — but other metrics show that there’s still competition for homes,” the report states. “Among the homes that are selling, more are going under contract within two weeks than a year earlier and the median price per square foot is up 8 percent.”
Other metro areas that are holding up well include Milwaukee, followed by New Haven and Bridgeport, both in Connecticut, and Albany and Rochester, both in upstate New York. The report notes that “homes in all those places are relatively affordable” and that they aren’t tech hubs so instability in that industry hasn’t hit them as hard.
The report ultimately paints a radically different picture of the housing market compared to what was happening earlier in the pandemic. In early 2021, for instance, Inman inaugurated its “hottest neighborhood” series by highlighting Bouldin Creek, near downtown Austin, Texas. The decision to focus on the area was prompted by a relentless wave of relocations to the Texas capital.
The rise of hubs like Austin, as well as places like Stockton and Sacramento that are adjacent to bigger cities, was part of what some observers called the “Great Reshuffling.” The trend involved workers quitting pricey markets and taking up residence in either entirely new cities, or in regions that were simply further removed central from business districts.
Redfin’s new report, however, suggests that the Great Reshuffling may have finally drawn to a close.