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Agents often say “real estate is local” when speaking to clients, potential leads, and family and friends in need of some sound buying and selling advice. While that phrase has become somewhat cliché, Redfin’s latest data report published on Tuesday proves consumers should take it to heart as metro-to-metro home-price variations reached Great Recession-era highs.
In February, most metro areas experienced annual median home price changes ranging from -4.9 percent to +5.7 percent, which translates to a 10.6 percentage points difference from the national average (up 0.4 percent year over year).
The high point of this variation was between March and May 2022, when the spread reached a 13-year high of 15.2 percent as buyers flocked to Phoenix, Miami and other popular locations throughout the South and the Sun Belt.
Taylor Marr
Redfin Deputy Chief Economist Taylor Marr said Americans are experiencing the impact of early-pandemic labor and economic trends, which saw some buyers and renters flee from expensive, dense metros to more affordable locales across the Midwest and South.
“The stark difference in home-price dynamics … may be a reflection of a long-term, pandemic-fueled shift in where people choose to live,” he said in the report.
Marr’s team used the price difference between San Francisco and Miami to illustrate the intensity of metro-to-metro home price variations. San Francisco’s home prices are down 10.1 percent annually while Miami’s prices are up 10.9 percent annually — creating a near-record-breaking 21-percentage-point spread.
“That 21-percentage-point difference is near the biggest in over three decades (it hit a peak of 23 points in August 2022), and it’s the largest gap among the major U.S. metros Redfin analyzed,” he said. “The wide gap in price growth between San Francisco and Miami reflects the starkly different homebuying experience in those two parts of the country.”
Marr said San Francisco is still recovering from an exodus of tech workers who took advantage of remote working opportunities, as illustrated by domestic migration from the Bay Area more than doubling between 2020 and 2022. Meanwhile, Miami’s real estate market is still being buoyed by an influx of those same workers.
“The fact that Miami prices are holding up well despite the national pullback in homebuying suggests the relative popularity of Florida is here to stay,” he said. “Even though some employees are returning to offices at least a few days a week, the pandemic has given many Americans much more freedom on where they choose to live — and a lot of them are choosing places where shelling out $1.5 million for a run-of-the-mill home isn’t the norm.”
Marr said the decline in San Francisco’s home prices doesn’t mean affordability has necessarily improved — the median home price still clocks in at $1.42 million. Although Miami’s median home price is 2.9 times lower than San Francisco’s at $483,000, it’s still a price that’s out of reach for most South Floridians.
“Some Bay Area house hunters who have been priced out for the last few years may finally be able to break into the market — if they can afford today’s elevated mortgage rates and still-high prices and find a home for sale amid the supply shortage,” he said. “Meanwhile, many South Florida locals are finding it harder than ever to afford a home.”
Washington, D.C., Redfin Premier agent Steve Centrella said the report highlights the importance of helping buyers and sellers properly contextualize national trends.
“If you’re buying a home here in the D.C. area, don’t rely on real estate advice from your friend in the Midwest or your cousin in California,” he said in the report. “Insights from other parts of the country can create confusion because they don’t necessarily reflect what’s happening on the ground in your neighborhood.”
“For instance, demand for downtown condos is returning here as government employees return to the office, so buyers may encounter competition for desirable units. That may not be the case in other parts of the country,” he added.
