Detroit Ousts Miami as Top Housing Market for Price Appreciation in Late 2023, per CoreLogic
Florida’s dominance in the housing market experiences a shift as CoreLogic’s home price index for November 2023 reveals a significant surge in home prices. With a year-over-year increase of 5.2%, the data highlights the strongest annual growth rate since January 2023, marking Detroit’s ascent above Miami in markets with the highest home appreciation growth.
CoreLogic, a financial services company, releases a monthly home price index incorporating public record data and over 45 years of repeat-sales transactions to analyze trends in home prices. Despite a five-week lag in data release, it stands as a gold-standard measure alongside the Case-Shiller index, which focuses on 20 cities nationwide. The CoreLogic model covers about 380 metropolitan statistical areas across the country.
Selma Hepp, CoreLogic’s chief economist, notes that home price appreciation persisted in November despite record-high mortgage rates throughout the year. The annual growth, when compared with the declines of the previous year, aligns with historical averages, reflecting robust seasonal gains.
Amidst a drop in mortgage rates in late 2023, currently standing at 6.74%, the November home price data doesn’t yet reflect these changes, raising questions about the dynamics in Florida’s real estate market. While home prices increased across the U.S., regional variations in appreciation emerged, with the Northeast, South, and Midwest experiencing the most robust increases driven by relative affordability.
Detroit leads in year-over-year gains with an 8.7% increase, displacing Miami from its 16-month top spot. Miami secures second place with an 8.3% increase, followed by Charlotte, North Carolina, at 7.4%. The demand for homes in warmer-weather locations, particularly Florida, surged during the pandemic, attracting over 655,000 new residents since its onset.
Despite assumptions that rising mortgage rates would lead to dropping home prices, demand in relatively low-cost markets like Florida has continued to drive prices upward. CoreLogic attributes these price gains to job growth spurred by the Inflation Reduction Act and the CHIPs Act, contributing to increased housing demand.
While markets in the Mountain West and Northwest, already relatively more expensive, saw price increases, they did not match the growth rate of November 2023’s winners. Some markets, such as Denver and Las Vegas, experienced modest year-over-year increases, while San Diego, an outlier, recorded a 7.7% increase. CoreLogic deems these major housing markets as overvalued, with forecasts indicating varied growth rates for the coming year.
Higher interest rates in the Mountain West and Northwest have a greater impact on homebuyers’ budgets, contributing to a larger seasonal slump, according to Hepp. Idaho, Utah, and Washington, D.C., are among the few markets that recorded price drops.
Appreciating home prices benefit sellers, allowing them to offload properties at potentially higher rates. However, this poses a significant challenge for buyers, with mortgage rates, inflation, and rising home prices making it difficult for new homeowners to enter the market.
CoreLogic offers a cautious outlook in its 2024 forecasting, predicting a slowdown in U.S. home price gains to 2.5% in November 2024. Despite Miami’s substantial gains in November 2023, several Florida markets are identified as majorly overvalued, raising concerns about potential declines in 2024.
CoreLogic identifies five metropolitan areas at the highest risk of home price decline, with four located in Florida—Palm Bay-Melbourne-Titusville, West Palm Beach-Boca Raton-Delray Beach, Tampa-St. Petersburg-Clearwater, Deltona-Daytona Beach-Ormond Beach—alongside Atlanta-Sandy Springs-Roswell, all having a “very high” level of risk of price decline within 12 months.
