The cities where home prices are rising the fastest are not the biggest cities, like New York and Los Angeles. They are not hot real estate markets with huge population influxes, like Phoenix or Miami. They are cities where people have low incomes and high poverty rates. Newark tops this list, as prices there have risen 17.5% in the year ending in March.
Newark is followed by Providence, where prices have risen 14.9% in the past year. Among the top 10 are Detroit (up 13.1%) and Cleveland (up 12.7%), according to a new study from Redfin.
Redfin’s experts point out that “U.S. home prices climbed 0.6% from a month earlier on a seasonally adjusted basis in March, matching February’s 0.6% month-over-month gain. On a year-over-year basis, prices rose 7.3%, also little changed from the prior month’s 7% annual increase.” Home prices have risen for most of the year. While mortgage rates are high, the inventory of homes for sale is exceptionally tight. One reason for this is that people who got mortgages with a 3% rate two years ago or earlier want to hang on to those mortgages.
Redfin did not explain why the price of homes in poor cities is rising so quickly. They were very inexpensive to start. The average home price in Detroit is about $71,000, which is a fraction of the national number. Some of America’s poorest cities are going through revivals. Governments and companies have built up downtown areas to attract new residents. Maybe that is working. (See which 40 U.S. cities have booming downtowns.)
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