As 6%-plus mortgage rates threaten housing affordability and slow a pandemic-driven homebuying boom, small markets in relatively affordable Midwest and East Coast metro areas seem to be faring the best, according to Redfin. Markets such as Lake County, Ill., Albany, N.Y., and Chicago represent a strong and slow North, where the majority of for-sale homes are still below the national median sale price of $407,000.
Nine of the top 10 housing markets cooling the fastest are located either in the Midwest or on the East Coast, and a recent increase in affordability is driving up demand in upstate regions that were formerly home to costly, red-hot markets with limited supply and unwavering competition.
“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.”
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