The U.S. housing market hasn't been so dependent on location in more than a decade, as the rise of remote work and the pandemic homebuying spree sent some cities' residential markets soaring and others crashing.
Variations in home price growth among U.S. metros reached a 13-year high in spring 2022, at the end of the pandemic homebuying boom, according to a report from Redfin. The variations have moderated a bit since then, but city-to-city price growth is still fluctuating more than before the pandemic, with some cities seeing declines in demand while others see gains.
- Variations in home price growth reached a 13-year high in 2022.
- The rise in remote work led Americans to move to different cities, diminishing home values in some areas while raising them in others.
- Generally, prices fell in tech-focused cities like Seattle and San Francisco, while they rose in Sun Belt destinations like Phoenix and Tampa.
The difference between the San Francisco and Miami housing markets is an example of the variations between cities. San Francisco home prices are down 10.1% year-over-year as of February, the most recent data available, while Miami prices are up 10.9% to a near-record high.
Thanks to the pandemic and rise of remote work, tech workers began leaving the Bay Area to seek more affordable places to live. Migration away from San Francisco more than doubled between 2020 and 2022. A slowdown in the tech industry has further diminished home values in the Bay Area, although the housing prices there are still higher than anywhere else in the country.
There's a 21 percentage point difference between San Fransisco and Miami's growth rate, nearly the highest in three decades. Florida’s growth isn’t just because of people fleeing the Bay Area, though. The Sunshine State had the largest population growth in 2022, with remote workers from all across the country seeking out lower home prices, lower taxes and better weather.
“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," said Redfin Deputy Chief Economist Taylor Marr. "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."
Other similarly positioned, tech-focused cities saw comparable trends. In Seattle, prices fell 9.4% year-over-year, while they grew in Tampa 7.7%. Prices in Atlanta grew 6.6%.
Spring 2022 Brought the Biggest Fluctuations
March through May of 2022 brought the largest price growth fluctuations over the last three years. Over those months, variations hit a 13-year high while home prices rose across the country, though the amount they rose depended on the location.
Most metros saw increases within 15.2 percentage points of the national average, ranging from increases of 13.6% to 28.8%. Homebuyers at the time were relocating from more expensive cities to more affordable areas, such as Phoenix and parts of Florida. High demand pushed prices up in those sought-after Sun Belt locations, while prices rose more modestly in areas like the Midwest and Northeast.
The places where people buy homes are often dependent on the economic cycle, Marr said.
“During economic boom times, when many Americans are flush with cash, homebuying demand soars because many people have the means to buy both primary and vacation homes and perhaps move from one part of the country to another," Marr said. "That pushes prices up in certain places and grabs the attention of home flippers, who jump into the ring and push prices up even further. When there’s a recession like there was in 2009, or economic uncertainty and fears of a recession like in 2023, homebuyers quickly pull back and prices swing down in some areas.”