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Just like the stock market, people who buy houses at the bottom of a slump get to watch their assets gain value when the market rebounds — and that dynamic is playing out in cities across America.
Post-pandemic housing inflation forced rapid appreciation in markets nationwide, but the Federal Reserve’s action to cool things down had the desired effect — in most places.
In other, much rarer cases, buyers didn’t flinch at rising mortgage rates and kept right on buying, making once-undervalued markets hot and pricey.
Here are four of the hottest.
El Paso, Texas
While the population and home prices in Texas boomed over the last few years, some cities remained among the most accessible in the country — but not for long.
“The El Paso market is a great example of this,” said Evan Karam, a 14-year realtor and investor and leader of the Evan Karam Real Estate Team. “Prior to the pandemic, El Paso was considered to be an underpriced market compared to other cities in Texas like Austin or Houston. But home values across El Paso have increased by over 40% since 2021. Some prime neighborhoods have seen almost triple their value over the last three years.”
At the start of the pandemic in March 2020, the average home value was around $145,000 — only about $10,000 more than in 2017. By the start of 2021, it was still under $160,000, but the race was on. Values skyrocketed and — unlike most markets — never stopped rising despite the Fed’s steep interest rate hikes. Today, the average home value is around $224,000.
Atlantic City, New Jersey
Atlantic City has been through several high-profile boom and bust cycles during its long and storied history as a preeminent East Coast beach resort town.
The mid-2010s was more of a bust, with the average home value falling below $80,000 at the end of 2016 — but that was the bottom and prices started heading up, up, up.
By 2018, the average home value was back up to six figures and kept rising on a trajectory that wasn’t phased by COVID-19, its tumultuous aftermath or the most expensive mortgages in 20 years.
“Prices in Atlantic City have risen by 20.6% over the last year, driven by a combination of affordable housing and increased demand,” said realtor and relocation and probate specialist Khaliyah Barakhyahu of New Canaan Properties brokered by eXp Realty.
Barakhyahu cited Realtor data, while Zillow says year-over-year growth was more like 17.1%, but either way, the average home value in once-bargain basem*nt Atlantic City is now nearly $215,000.
Westport, Connecticut
Some of the ritzy enclaves in the perimeter of America’s richest and most expensive city have priced out even many of the wealthy elite in recent years.
“Homes that were once off the commuting grid to New York City are still appreciating, such as Westport, Connecticut,” said Coldwell Banker broker Judy Michaelis. “Westport depreciated in almost every year from 2008 to 2020. In 2020, appreciation started and has not stopped with record low inventory and high demand.”
The average home value in the tiny town on the Long Island Sound had fallen below $1.2 million by 2016 and below $1.1 million by 2019. In 2020, just as Michaelis said, Westport hit rock bottom at $1.04 million, missing six-figure prices by less than $50,000.
The buyers who got in as the pandemic arrived were at the start of a wild and wealth-building ride. By the end of 2021, values were at $1.4 million, then $1.63 million in the fall of 2022.
Today, the average home in Westport is valued at just shy of $1.8 million.
Greenbelt, Maryland
Another market where prices have soared with virtually no post-rate-hike dip is a lesser-known but equally red-hot spot in Prince George’s County, Maryland.
“One example of a formerly underpriced housing market that is now experiencing a significant rise in home prices is Greenbelt,” said real estate agent and investor Kateryna Odarchenko. “This surge follows the announcement of a new FBI office set to be constructed in the area over the next 10 years, with investments exceeding $3 billion. The real estate market has seen substantial growth in property values as a result.”
Instead of being bad for buyers, Odarchenko sees the trend as positive for the state because it could help mitigate the economic disparities that have plagued it.
“The issue is particularly pressing near the capital, where Montgomery County has sufficient resources for development, whereas Prince George’s County has struggled with fewer resources, especially following the mass bankruptcies of buyers after 2008,” Odarchenko said.
The highest mortgage rates in 20 years didn’t slow down Greenbelt’s market. The average home there was valued at $230,000 at the start of the pandemic. Its upward trajectory never wavered, and today’s average is closer to $284,000.
Note: All home values are from Zillow unless otherwise noted.
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