Yahoo Finance Housing Market 2024: Cross These 4 Cities Off Your Homebuying List
The real estate market has grown substantially from year to year over the past decade. According to Statista, the residential real estate market is seeing a surge in demand and is projected to increase by a compound annual growth rate of 4.99% from 2024 to 2029. But as the market rises, so do home prices.
Learn More: Housing Market 2024: Home Prices Are Plummeting in 10 Formerly Overpriced Housing Markets
Check Out: Become a Real Estate Investor for Just $1K Using This Bezos-Backed Startup
If you’re looking to invest in a home this year, it pays to do your research. GOBankingRates talked to real estate expert Lauren Keen Aumond, co-founder of House Money and founder of Adulting Is Easy, to get insights into the current real estate market and what cities homebuyers should avoid.
Joshua Tree, California
“As someone who primarily invests in short-term rentals, I’d recommend that new hosts or vacation home shoppers stay away from the oversaturated markets,” Aumond said. Joshua Tree happens to be one of them.
According to The Wall Street Journal, the typical home value was $217,007 in 2020, and it had more than doubled at one point, reaching $467,348 in 2022, thanks to people moving in due to the pandemic. Now people are moving away and trying to sell in a market with a lot of inventory.
While the typical home value has come down to $385,941 as reported this past February, the market is now oversaturated. Besides a mortgage, there are property taxes, insurance and upkeep expenses to consider.
Find Out: Cheapest Places To Buy a Home in Every State
Be Aware: 10 Housing Markets That Will Plummet in Value Before the End of 2024
Wealthy people know the best money secrets. Learn how to copy them.
Orlando, Florida
Orlando is a top tourist location, thanks to attractions like Disney World, Universal Studios, SeaWorld, Legoland and more, but it shouldn’t be considered a top housing market.
There is low inventory in Orlando, making supply and demand an issue. Lower inventory causes bidding wards, and many investment firms have been able to secure the funding needed to purchase multiple properties. “In my opinion, the professional and well-funded operators will have an edge in those markets and will be hard to compete with for the foreseeable future,” Aumond said.
There are also other issues that prevent people from wanting to purchase in Orlando. Homeowners insurance is high due to floods, which can cause higher interest rates, increased property taxes and more maintenance costs.
Despite the rising costs, Orlando is still considered more affordable to buyers from states like California. Outside buyers who saw significant equity when selling their last house can afford to offer more to sellers, which can outprice those who live locally, again causing bidding wars.
Read Next: 8 Places Where Houses Are Suddenly Major Bargains
Los Angeles
Zillow recently published a list of the top 10 cities with the worst housing shortages, and California towns took five of those spots. San Francisco, San Jose, San Diego, Sacramento and Los Angeles all found a place on the list, with Los Angeles being the most pressing. It’s estimated that Los Angeles currently has a housing shortage of 337,000.
One reason for the housing shortage is that fewer homes are being built. Developers have mentioned higher materials costs due to inflation, higher wages across the state and complex regulations as factors contributing to the issue.
Another reason is higher interest rates. They cut into a developer’s profits, making building homes in Los Angeles less desirable than it once was.
San Francisco
Thanks to technological advances, high-paid tech workers have contributed to driving up San Francisco’s home prices. The average home price in San Francisco is about $1.3 million, which is even higher than the average price of a home in Los Angeles. The average mortgage payment is $7,843, according to HSH, and the average rent for an apartment is $3,287, according to RentCafe.
Surrounding areas, such as Sacramento and San Jose, aren’t much cheaper, making purchasing a home less affordable for those who aren’t in tech.
Plus, San Francisco is mostly water-locked, so there aren’t many places to build additional housing to help with supply and demand.
The Choice Is Yours
Despite the high costs in these cities, Aumond said it’s ultimately your choice when deciding where to purchase a home. “When it comes to buying a home for yourself, you shouldn’t stay away from any market in particular,” she said.
If your circumstances have you living a life you love in an area where you want to live and if you can afford to buy a home, buy one and live there for a long time. Quality of life is important, and while you can find somewhere cheaper to live, it doesn’t make sense if you’re miserable.
“Short-term thinking and fluctuations shouldn’t play a role in your primary homebuying mentality,” Aumond said.
More From GOBankingRates
This article originally appeared on GOBankingRates.com: Housing Market 2024: Cross These 4 Cities Off Your Homebuying List
