Across the U.S., home prices continue to rise, although the pace has slowed down compared with the pandemic-era boom. As of mid-2024, the average U.S. home sold for $442,525, a 4% increase year over year, according to Redfin. And with mortgage rates remaining high, real estate deals have been slumping, with the number of homes sold down 12.1% year over year, per Redfin.
However, real estate conditions can vary significantly across different regions, and it’s possible that some housing markets could see a significant jump by the end of the year.
As of now, current market conditions aren’t conducive to soaring values, and there’s not much time left in the year for things to change, according to Dan Richards, president of Flyhomes Mortgage. “That said, if mortgage rates were to drop to the 6% range, that would create a spike in demand across the country, and the cities with the lowest levels of inventory could see significant short-term appreciation,” he added.
With that in mind, here are some cities with urban housing markets that could soar in value before the end of the year.
Philadelphia
Philadelphia housing prices lag the national average, with the average home going for $280,000, a 3.7% year-over-year increase, according to Redfin. But that could soon change.
“Cities throughout the East Coast and Midwest will likely experience an unusually hot fall homebuying market that could send prices soaring. Much to buyers’ frustration, these areas have lagged behind in terms of construction, which has led to increasing housing shortages and propped up home prices,” said Cody Horvat, licensed real estate broker at The Scott Group, a division of Compass.
“As we head closer to the election, there will be pressure on the Federal Reserve to push interest rates down, which would invite a flood of buyers into the market. If mortgage rates come down, the lack of inventory coupled with increasing demand will push prices to soar,” he added.
Philadelphia is one of the markets in these regions that Horvat thinks will see some of the largest increases in home prices, due to its relative affordability compared with some other East Coast cities, which can attract demand.
Cleveland
As for a city in the Midwest that fits Horvat’s view, Cleveland stands out. Much like Philadelphia, Cleveland could have the right combination of relative affordability now and a lag in housing construction, as well as an overall housing shortage that has propped up home prices, he said.
Currently, Cleveland is already seeing significant price increases that could continue to grow, particularly given the low baseline. The average home costs only $125,000 in Cleveland, though that’s up 7.8% from a year ago, according to Redfin.
Boston
Boston is another East Coast city that could see a jump in value, despite already having relatively high home prices. Here, the average home sells for $830,000, but it’s seen only a 2.2% increase year over year, according to Redfin.
If interest rates drop, cities like Boston that have the right conditions — such as low inventory, high desirability, high population density and high-paying jobs — could see quick price appreciation, according to Richards.
San Francisco
Some West Coast cities that meet the conditions Richards noted could also see big price increases if interest rates fall, including San Francisco.
The pandemic took a toll on the city, with more people moving out than in. That helped home prices actually decrease in San Francisco a bit, although it still remains one of the most expensive housing markets in the country.
On average, a home in San Francisco sells for $1.43 million, according to Redfin. That’s a 1.4% increase from a year ago, but it’s down 7.4% from two years ago.
However, San Francisco’s population has started to grow again, and housing prices could bounce back too.
Seattle
Similar to San Francisco’s prices, housing prices in Seattle are down a bit from 2022, but they’re up 4.1% since last year, with an average selling price of $859,000, according to Redfin.
However, Seattle fits Richards’ bill as a city where people want to live that also has low housing inventory, high population density and high-paying jobs. Altogether, that could support an increase in home values if mortgage rates drop significantly before the end of 2024.