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Cities in the Midwest and South topped Realtor.com's list of markets with the biggest gains in price per square foot.
- New Realtor.com report finds Omaha, Nebraska, and Jackson, Mississippi, had the largest price jumps based on price per square foot.
- Metro areas that rose quickly early in the pandemic tended to show bigger declines.
- Boise, Idaho, led the decliners with a 5.8% year-over-year drop.
While the overall real estate market doesn't seem ready to ring in the new year, some local markets may be poised for further price growth.
Realtor.com released its list of the top five cities where prices rose and fell the most among the 100 largest metro areas in 2022, based on the median price per square foot. Omaha, Nebraska, and Jackson, Mississippi, had the biggest increases over the past year, with each rising 21.6%. Boise, Idaho, (down 5.8%) and Denver (down 5.7%) posted the largest declines in the past year. Boise had been a "Zoom town" market early in the pandemic, attracting an influx of buyers, but buyer interest dropped off abruptly in 2022.
Looking at the price per square foot can be a useful way to gauge what's happening in a housing market, but it doesn't necessarily tell the whole story. A smaller house with a higher price per square foot may have other high-end features, more undeveloped land or other features like a swimming pool. There are plenty of other variations that can affect the accuracy of this measurement, including location, age of the home and condition.
Still, analyzing the price per square foot can show how a market is trending. Omaha, for example, bucked the slowdown trend in 2022 because it was relatively affordable even with elevated mortgage rates, rising from $149 per square foot to $181. The national average is around $212, suggesting that Omaha could be still viewed as an attractive option for those seeking more affordable options.
Even with its price jump, Jackson, Mississippi ($144), is still more than 30% below the national average. The other metro areas that made the top five list were also relative bargains: Wichita, Kansas ($135, up 21.5%); Milwaukee, Wisconsin ($204, up 20.9%); and Little Rock, Arkansas ($142, up 20.1%).
The national median price does not yet show signs of stabilizing, however. According to data gathered by the St. Louis Federal Reserve, the price per square foot peaked at $227 in June and has steadily fallen since then. It started rising sharply early in the pandemic, when it was $155 in March 2020.
Generally the cities with the biggest increases in price during the pandemic are now seeing the biggest drops. While down 5.8% year-over-year, Boise's median price is now at $263, still well above the national median. Similarly, Denver ($280 per square foot) and Sacramento ($328) were year-over-year decliners but expensive relative to the national numbers.
"It's the natural reaction to the sharp run-up in prices over the past couple of years now meeting the new, higher mortgage rates this year," said George Ratiu, senior economist at Realtor.com.
New Orleans is an outlier in the list of decliners, with a median price per square foot that is below the national average, coming in at $179. That represents a rebound opportunity in 2023, according to the report.