Housing Times 2023: Avoid buying a home in these ten places if you want to gain value


Housing Times 2023: Avoid buying a home in these ten places if you want to gain value

Purchasing a home will have a dual benefit: firstly, by providing a place to live, and secondly, by becoming a profitable investment. Fortunately for most U.S. homeowners, home values have consistently risen over the years – although some markets are far superior to others.

Between 1991 and 2022, the average annual increase in home prices was 4.3%, according to a Credit Karma report that cited Federal Housing Finance Agency data. Since 2000, the average rate has been 4.7% per year. From 2012 to 2022, the average rate was 7.7%. However, during the 12 months ending in April 2022, median home values nationally rose a whopping 18.8%, fueled by a hot housing market. Home prices and values in most U.S. markets continue to rise in 2023.

Your home's appreciation rate depends on many factors, with location at the top. For example, median home values in Florida rose about 30% during one-quarter last year, Credit Karma reported, while home values in North Dakota rose about 10% during the same time frame.

No matter how the overall U.S. housing market performs in the coming years, buying a home in some areas of the country will be better than others. A recent analysis of homes by SmartAsset, which compared home value data for 400 metropolitan areas between 1998 and 2022, found that Texas outperformed the rest of the country regarding home value growth and stability, while Michigan consistently ranked near the bottom.

If you want to see how much of a difference location can make in home values, consider that from 1998 to 2022, median home prices in the Austin-Round Rock-Georgetown, Texas, metro area rose 354%. In contrast, prices rose only about 72% in Flint, Michigan, during the same period.

Sometimes, you only have a few choices about where to buy a home due to work or family commitments. But when you have flexibility, it pays to do your research and decide where your money is best spent.

If you're in the market to buy a home now, here are ten places you should avoid if you want to see your home's value rise. The rankings are based on SmartAsset analysis and consider historical increases in home values and the "historical average home value loss," which reflects the potential for a price decline of 5% or more within a decade after purchase.

1. Flint, Michigan: Historical average home loss is 45%

2. Monroe, Michigan: 44%

3. Detroit-Dearborn-Livonia, Michigan: 44%

4. Saginaw, Michigan: 40%

5. East Stroudsburg, Pennsylvania: 45%

6. Rockford, Illinois: 39%

7. Bay City, Michigan: 40%

8. Kokomo, Indiana: 39%

9. Warren Troy Farmington Hills, Michigan: 42%

10. Jackson, Michigan: 42%

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