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Home Price Gains Squeeze Affordability In Reliably Affordable Markets

Jan 21, 2025

Midwest cities have seen the highest growth rates, challenging their status as “budget-friendly”

Despite end-of-year forecasts spelling slower home price gains in 2025, recent reports show home prices marching steadily higher in January, worsening affordability challenges facing prospective homebuyers.

Traditionally affordable cities — particularly those in the Midwest — have seen the most significant price growth to start the year, according to a new Redfin report. Nationwide, home prices are up for the first time since May 2022.

Cleveland led the way with a 15% year-over-year increase, followed closely by Milwaukee at 14.5%, and Philadelphia at 14%. This surge in prices worsens an ongoing trend of affordability challenges across the U.S. 

“Places that have long been known as affordable places to live, like Cleveland and Milwaukee, are now seeing double-digit price increases — and that’s after home prices skyrocketed during the pandemic,” said Redfin Senior Economist Elijah de la Campa.

While home equity gains have accumulated for current homeowners watching their home values rise, property tax bills have risen in tandem, driving up overall housing costs in these once-affordable states.

“Affordable housing havens have become harder and harder to come by; even places that saw some price relief last year, like Texas and Florida, are now seeing prices tick back up,” de la Campa added.

Sellers, many of whom witnessed record-high sales in their neighborhoods during the pandemic, remain firm on pricing.

“A lot of sellers have a very specific number in mind because they saw their neighbor sell for $40,000 over the asking price during the pandemic,” said Bonnie Phillips, a Redfin Premier agent in Cleveland. “They’re willing to walk away if they don’t get that number, which is one factor keeping prices high.”

At the same time, the rapid increase in home values is making it harder for local buyers to afford properties in their own communities.

“Cleveland may still have a reputation as an affordable-housing haven among out-of-staters, but not so much among locals,” Phillips said. “Many families have been priced out, and those who can still afford to buy have to move to neighborhoods they don’t really want to live in.”

Nationally, median home prices have climbed to $427,670, though costs vary widely by location. In Massachusetts, for example, the average home price reached $615,000 in December 2024 — an increase of 7.9% from the previous year, according to The Warren Group.

While prices have risen across all major metros, Florida stands out for having the slowest growth across the board. Tampa and Orlando, for instance, saw only modest increases of 0.5% and 1.3%, respectively.

Florida’s relatively low price growth can likely be attributed to multiple factors.

The state’s housing market has faced mounting pressures, including rising property taxes — up about 50% since 2019 — and an increase in violent natural disasters, making some once-desirable areas less attractive to buyers.

About the author
Kathryn Fitzpatrick is an associate editor at NMP.
Published
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