Up, Up, Up Goes the Trajectory for the Most Expensive U.S. Housing Markets

Despite the pandemic, the most expensive housing markets nationwide remain the same as they did in early 2020. What’s changed is that prices have increased by 40% and the total value of real estate has soared to $44 trillion from $33 trillion. For those who own that’s good news since their home equity generally has kept in lock step and increased, according to CoreLogic Inc. 

Eight of the 10 markets, according to the March 2023 data released, were in California with San Francisco at No. 1 and homes there had a staggering price tag of $1.4 million, up from an also high, just not as high, $1.25 three years before. That city was followed by San Jose at $1.29 million and $912,000 the year before. Then came Anaheim, Oakland and Los Angeles. Honolulu was in sixth place, but then the remaining metros again were in California and specifically in San Diego, Oxnard and Santa Rosa.

The report suggests that the California market’s appeal and value are driven by its strong economy, outdoor amenities and good weather, and that their high costs were in place even before the tech boom. For those worried about wildfires, a genuine concern, they burned about 362,000 acres last year. But that was down from 2.5 million acres the year before and a historic 4.3 million acres in 2020, according to a New York Times report. The 2023 wildfire season  is said to be off to the quietest start in at least a decade, according to another report.

Besides the expensive markets staying in basically the same positions over the three-year time frame, from January 2020, so did the least expensive Metropolitan Statistical Areas (MSAs) for the roughly same period, with cities of Detroit, Cleveland and Rochester, N.Y., falling into that category.

The markets that changed were mostly in the middle of the spectrum with some appreciating more than others. In that category were several in Florida where so many migrated during the pandemic due to weather, remote work and no state individual income tax. Among the destinations most noteworthy there are Cape Coral-Fort Myers, which moved up 30 spots to become the 60th most expensive MSA in the top 150. Tampa moved up 16 spots from 80th to 64th and North Port-Sarasota-Bradenton moved up 18 places from 57 to 39. 

Appreciation dropped in certain areas and reflect a wide geographic spectrum rather than one state such as California. The three markets with the largest declines were Minneapolis, Baltimore and New Orleans. Others also experiencing downturns ranged from Northeast Philadelphia to Midwest Des Moines, and down to Southeast Corpus Christi, Texas, and then back to Midwest Milwaukee.

Remote work, mortgage rate increases and high home prices all worked to shift demand to more affordable housing markets. Yet, the changes did not change much when it came to the most and least expensive markets previously cited. What it did change was the price gap between buying a house in California versus Florida, which is now closer than it was. That may make the California market become relatively more attractive and change some migration patterns back to the West Coast, the report suggests.