We expect 2024 to be another complex year for the housing market. Similar to the beginning of this year, many issues, including mortgage rate volatility, the perpetual dearth of housing supply, and consumer confidence about the housing market at record lows, are dampening demand. The challenges are hitting at the same time that demographic-supported housing demand is still strong.
When we look at the demand pool, “life happens” has been the biggest driver of activity over the past year. For example, having a baby, getting married, filing for divorce, and relocating have been forces that encourage the sale and/or purchase of a home despite financial hurdles. This has allowed for sales across different demographic cohorts and different home buyer types, including move-up buyers, entry-level shoppers, and relocators.
As 2023 comes to a close, we are reminded that housing is local. Some housing markets are still humming along, while others have slowed considerably. It’s with this backdrop that we created our top markets list for 2024.
Each year, we like to approach our list from a different angle:
- In 2021, we highlighted markets that had relative growth potential driven, in part, by strong infrastructure and connectivity. That list was intended to capture the impact of changes to housing demand brought on by the pandemic.
- Our top markets list for 2022 was focused on the entry-level buyer segment given the rapid run-up in prices.
- We differentiated our 2023 rankings from previous years to emphasize markets that were the most “interesting” rather than the “best” due to the lingering questions related to overall national upward trends versus individual market dynamics.
- For 2024, we are focusing on the top affordable markets to watch.
Like in previous years, we created an index to guide the analysis. We focused on the markets that offer the best combination of attainability and resilient housing demand. Our top markets have strong fundamentals as well as homes that offer relative affordability for both local and out-of-market buyers.
We focused on the following inputs to our index:
- Number of new-home projects priced below $400,000. Projects with at least one floor plan priced below $400,000 remain an affordability threshold that allows those with incomes in line with the national average to be able to afford a home. Markets with an outsized share of lower-priced inventory have the potential to outperform in 2024 given mortgage rates are expected to remain elevated and affordability will continue to be a key limiting factor. Note, we increased the threshold this year from $300,000 used in past lists to $400,000 due to the share of homes under that $300,000 mark steadily diminishing given home price appreciation and higher land, labor, material, and governmental costs.
- Existing affordability ratio. This component accounts for the attainability of the median existing home relative to median incomes. Historically, the resale market accounts for nearly 90% of the housing market and sets the pricing barometer for a local market. A higher ratio indicates a market where more local households can afford the median-priced home.
- Total net migration. Relative affordability has been the biggest driver for migration since the start of the pandemic, and we expect that it will continue to push migration and sales going forward. We included total net migration in our index because it accounts for the buyers who may be moving from higher-cost markets to lower-cost markets. This input supplements our inclusion of the affordability ratio because the former only accounts for local incomes and the latter tracks migration patterns. Important, total net migration also includes international buyers, many of whom are more accustomed to historically higher payment-to-income ratios.
- Share of high-income jobs. The last decade-plus has seen many metros change the makeup of their employment market. Typically, higher-income individuals are more likely to be or become homeowners. While high-income job growth doesn’t guarantee housing success, it is a key factor to watch.
We considered Zonda coverage markets with a population of over 750,000. This allowed us to include metro areas outside of our typical top markets that are still sizable.
Putting it all together, the map above illustrates Zonda’s top affordable markets to watch for 2024. Three metros—Cincinnati; Louisville, Kentucky; and Houston—overlap from our 2023 list, and two markets—San Antonio and Indianapolis—overlap with 2022’s list.
Columbia, South Carolina
South Carolina’s capital ranks No. 1 on our list for 2024. The metro boasts a unique combination of affordable projects paired with high relative affordability. These two provide a lower barrier of entry to homeownership than some other large markets. As affordability remains the biggest problem for potential buyers, Columbia’s attainability combined with steady migration should help the market outperform in 2024.
Stats at a glance (rank among sample markets):
- Share of new-home projects below $400,000: 90% (2nd)
- Existing-home affordability ratio: 48% (6th)
- Total net migration: 1.2% (17th)
- Share of high-income jobs: 24% (33rd)
Pros: Moderate temperatures; relative affordability; cultural and historical appeal; proximity to both the beach and mountains.
Cons: Some negative weather between hurricanes and humidity; a relatively low share of high-income jobs; locals feeling the pinch of higher home prices.
Indianapolis
Ranking second, Indianapolis climbs near the top due to the same factor as Columbia—relative affordability. Indianapolis ranks in the top 10 in both share of projects with a minimum price under $400,000 as well as a high affordability ratio; 52% of households are able to afford the median existing home.
Indianapolis is a growing construction market. The metro ranks 24th on our list of top markets by housing starts and the third quarter data shows an increase both quarter over quarter and year over year.
Stats at a glance (rank among sample markets):
- Share of new-home projects below $400,000: 66% (8th)
- Existing-home affordability ratio: 52% (3rd)
- Total net migration: 0.4% (26th)
- Share of high-income jobs: 25% (26th)
Pros: Relative affordability; sports culture; a low total cost of living; small-town feel in a bigger city; connectivity throughout the country; developable land.
Cons: Harsh winter; lesser considered relocation market; a lower share of high-income employment.
San Antonio
San Antonio, which has grown given increased migration for more attainably priced housing, ranks third. Based on the most recent available data, San Antonio ranked No. 4 in domestic net migration thanks to, in part, the overflow from Austin. The metro, a lower-priced and affordable alternative to larger Texas markets, has continued to attract many new residents throughout 2023.
While affordability is better than many other large markets, San Antonio has arguably grown too fast for its own good. Residents are finding conversion to homeownership a lot harder than in the past, and sales have slowed notably as a result. Even still, San Antonio is the sixth-largest production market across the country.
Stats at a glance (rank among sample markets):
- Share of new-home projects below $400,000: 66% (7th)
- Existing-home affordability ratio: 43% (11th)
- Total net migration: 1.6% (12th)
- Share of high-income jobs: 24% (29th)
Pros: Relative affordability compared with other Texas markets; no state income tax; low cost of living; cultural diversity.
Cons: Becoming increasingly unaffordable relative to itself; high poverty level; limited public transportation; a lower share of high-income jobs.
Greenville, South Carolina
Greenville ranks fourth on our top affordable markets for 2024. Greenville boomed during the pandemic and has since cooled; Redfin classifies the market as “somewhat competitive” today. The market sits near the top of our ranking due to the attainability of new-home projects as well as being an extremely strong domestic migration destination, led by interest from those in New York, Los Angeles, and Washington, D.C.
Stats at a glance (rank among sample markets):
- Share of new-home projects below $400,000: 87% (3rd)
- Existing-home affordability ratio: 40% (17th)
- Total net migration: 1.9% (8th)
- Share of high-income jobs: 23% (37th)
Pros: Outdoor activities; attainability; moderate weather; walkable downtown.
Cons: A lower share of high-income jobs; fewer social and entertainment options; rapid growth over a short period of time.
Cincinnati
Cincinnati, a holdover from last year’s list, ranks extremely well in our affordability metrics, in terms of both share of new-home projects with a minimum price under $400,000 as well as existing-home affordability. Currently, 51% of households can afford the median-priced new home locally. Despite the affordability draw, Cincinnati doesn’t have a strong national reputation as a relocation hub and has yet to gain notable traction with migration.
Stats at a glance (rank among sample markets):
- Share of new-home projects below $400,000: 58% (10th)
- Existing-home affordability ratio: 51% (4th)
- Total net migration: 0.2% (30th)
- Share of high-income jobs: 24% (34th)
Pros: Low cost of living; diversifying economy; museums and sports teams; home to several Fortune 500 companies, including Procter & Gamble, Kroger, and Fifth Third Bank; low crime rate; relative affordability.
Cons: Less desirable weather than many top markets; minimal rail connectivity; not a significant share of high-income jobs.
Louisville
Louisville, another repeat market from last year, posts extremely strong affordability and attainability metrics, but its migration flow, as well as the second lowest share of high-income jobs among our top 10, limits its performance. Louisville’s housing market has been strong since 2020, but the growth was milder compared with some other markets. Similar to Cincinnati, the affordability proposition has not yet converted potential out-of-market buyers. As mortgage rates hold high, it may be a key market in 2024 as people consider their options.
Stats at a glance (rank among sample markets):
- Share of new-home projects below $400,000: 81% (4th)
- Existing-home affordability ratio: 48% (5th)
- Total net migration: 0.1% (34th)
- Share of high-income jobs: 21% (45th)
Pros: Relatively affordable; more under the radar than some of the pandemic boom markets; reasonable tax environment.
Cons: Some extreme weather events; lack of public transportation; high-income job growth has been slow despite a diverse labor force; higher crime rates.
Houston
Houston, our last holdover from last year’s list, remains due to its strong affordability proposition as well as its attraction for domestic movers. Houston’s job makeup is different than most across the country due to the presence of oil and gas but also employment diversity. Houston is one of the most supplied new-home markets given its sprawl, which adds to the attainability but also competition among builders. In fact, Houston is the second-largest new-home production market in the country.
Stats at a glance (rank among sample markets):
- Share of new-home projects below $400,000: 62% (9th)
- Existing-home affordability ratio: 43% (13th)
- Total net migration: 1.2% (18th)
- Share of high-income jobs: 23% (36th)
Pros: Relatively easy regulation to help get more homes built; no state income tax; low overall cost of living; land availability; culturally diverse.
Cons: Large number of units under construction; tropical storm/climate risk; heavy dependence on the oil and gas industry (though the local economy has diversified); tough traffic with limited public transportation.
Raleigh, North Carolina
Raleigh has been a housing market darling since early 2020 as the combination of affordability, lifestyle, and employment attracted buyers from all over the country. In fact, Raleigh has been a top five Baby Chaser city for the past five years. Looking forward to 2024, the same attractive proposition remains but with worse relative affordability.
Stats at a glance (rank among sample markets):
- Share of new-home projects below $400,000: 49% (16th)
- Existing-home affordability ratio: 35% (26th)
- Total net migration: 1.7% (9th)
- Share of high-income jobs: 30% (6th)
Pros: Lifestyle; high-income job share; mild winters; variety of things to do.
Cons: Shrinking relative affordability; sprawl; limited public transit; congestion.
Greensboro, North Carolina
Greensboro is the fourth metro from the Carolinas to make our top 10, ranking ninth due to lower local home prices and relative affordability. Greensboro is located between Charlotte and Raleigh, allowing for some overflow and/or work-from-home demand. Moreover, Greensboro, like Raleigh, has benefited from increasing interest in the state for work, school, weather, lifestyle, or affordability reasons. The employment market and lack of high-income jobs are limiting factors that pose a risk to future housing market success, though.
Stats at a glance (rank among sample markets):
- Share of new-home projects below $400,000: 69% (5th)
- Existing-home affordability ratio: 45% (9th)
- Total net migration: 0.7% (23rd)
- Share of high-income jobs: 19% (49th)
Pros: Good access to interstate highway system; relatively close to Charlotte and Raleigh but more affordable; lower cost of living; family-friendly.
Cons: More under the radar; very small share of high-income jobs; fewer social and entertainment options.
Lakeland, Florida
Lakeland rounds out our top 10. The market is driven by being first in both attainability of a new home as well total net migration. Florida as a whole has been red hot for migration, attracting buyers both domestically as well as internationally. The combination of lower prices and taxes has drawn significant interest from movers of all ages.
Lakeland itself is in growth mode, with city officials, builders, and developers focusing on infrastructure and affordable housing. Lakeland ranks 22nd on Zonda’s list of top markets by housing starts, with the most recent data capturing an increase quarter over quarter and year over year.
Stats at a glance (rank among sample markets):
- Share of new-home projects below $400,000: 91% (1st)
- Existing-home affordability ratio: 34% (27th)
- Total net migration: 4.1% (1st)
- Share of high-income jobs: 21% (44th)
Pros: Relatively desirable weather; no state income tax; proximity to Tampa and the beaches; the metro is growing rapidly; Amazon’s Southeast hub.
Cons: Expensive relative to itself; risk of natural disasters and tropical storms; currently limited share of high-income jobs but potential for more in the future.
