Florida’s long reign is over as housing prices stay hot. That’s one of the big takeaways from the CoreLogic home price index’s data for November 2023, which shows yet another surge in home prices. The cost of housing shot up 5.2% year-over-year in November 2023, the index said, the strongest annual growth rate recorded since January 2023, and Detroit unseated Miami atop the markets seeing home appreciation growth.
Each month, financial services company CoreLogic releases its home price index, which incorporates public record data as well as other real estate databases, and incorporates more than 45 years of repeat-sales transactions to analyze home price trends. Although the data gets released with a five-week lag, it’s one of the gold-standard measures for the real estate market, along with the granddaddy of them all, the Case-Shiller index. The Case-Shiller model uses data from 20 cities nationwide, whereas the CoreLogic model is derived from about 380 metropolitan statistical areas around the county, according to a CoreLogic spokesperson.
“Home price appreciation continued to push forward in November, despite the new highs in mortgage rates seen over the year,” Selma Hepp, CoreLogic chief economist, said in a statement. “And while the annual growth reflects comparison with last year’s declines, seasonal gains remain in line with historical averages.”
Mortgage rates started dropping in late 2023 and are currently 6.74%, according to Mortgage News Daily, but November home price data would not reflect those changes. So what is going on with Florida?
Winners and losers of November 2023’s housing market
Although home prices generally were up across the U.S. in November 2023, there were winners and losers in terms of home appreciation. The Northeast, Southern, and Midwest markets posted the strongest increases “where relative affordability continues to drive demand,” according to CoreLogic. In other words, home prices were actually up in the same markets that have been known to be more affordable.
Detroit posted the highest year-over-year gain at an 8.7% increase, knocking out Miami from its 16-month run in the top spot of highest-appreciating cities. Miami still came in second place, though, at 8.3%, followed by Charlotte, North Carolina, at 7.4%.
As the pandemic heated up, so did the demand for homes in warmer-weather places. This led to a massive flocking to Florida—and not even just by retirees. Since the start of the pandemic, Florida has welcomed more than 655,000 new residents, according to Census data. This demand pushed home values in Florida to new heights, and Zillow named Florida as the second-most valuable real estate market in the U.S. in September 2023. Miami, for its part, claimed a few major financial services firms during the past couple years, notably hedge-fund giant Citadel, as it positioned itself as “Wall Street South,” and its crypto-loving mayor flirted with a Bitcoin-friendly regulatory environment, although that has taken a backseat after the crypto winter.
Yet rising home prices in Florida and other markets defy the perception that home prices would drop as mortgage rates continue to rise, but demand in these relatively low-cost markets has continued to drive prices up.
“This continued strength remains remarkable amid the nation’s affordability crunch but speaks to the pent-up demand that is driving home prices higher,” Hepp said. “Markets where the prolonged inventory shortage has been exacerbated by the lack of new homes for sale recorded notable price gains over the course of 2023.” CoreLogic credits these gains in home values to job gains thanks to the Inflation Reduction Act and the CHIPs Act “helping to spur housing demand.”
Markets that are already relatively more expensive and have lower demand—like the Mountain West and Northwest—continued to see price increases, but not at the same rate as November 2023’s winners. Denver home prices were up just 1.6% year-over-year and Las Vegas saw just a 3% jump. San Diego was an outlier of this group with a 7.7% year-over-year increase, but CoreLogic forecasts it will see just 3.3% growth this coming year. CoreLogic also considers these three major housing markets—Denver, Las Vegas, and San Diego—to be overvalued.
“In the Mountain West and the Northwest, higher interest rates are having a greater impact on homebuyers’ budgets, which is contributing to a larger seasonal slump,” Hepp said. Some of the only markets that recorded price drops include Idaho (-1.3%), Utah (-0.4%), and Washington, D.C. (-0.2%).
2024 housing price forecast
While appreciating home prices are good for sellers who can afford to offload their property and reenter the housing market at rates that are likely higher than when they purchased, they’re a major detriment to buyers. Mortgage rates, coupled with inflation and rising home prices, have made it all but impossible for new homeowners to break into the market.
CoreLogic offers a small glimmer of hope in its 2024 forecasting. They predict that U.S. home price gains will slow to 2.5% in November 2024, according to the report released Tuesday. But even though Miami saw major gains in November 2023, several Florida markets are also tagged as being majorly overvalued, according to CoreLogic and other organizations that track real estate values. Indeed, a joint study by Florida Atlantic University and Florida International University found that the state has several overvalued housing markets. In turn, CoreLogic sees some of these housing markets as having a chance to decline in 2024.
There are also five metropolitan areas that CoreLogic names as being the top markets at risk of home price decline, four of which are in Florida. They name Palm Bay-Melbourne-Titusville, West Palm Beach-Boca Raton-Delray Beach, Tampa-St.Petersburg-Clearwater, Deltona-Daytona Beach-Ormond Beach, and Atlanta-Sandy Springs-Roswell having a “very high” level of risk of price decline in 12 months.
The next CoreLogic reading is scheduled to be released February 6, which will feature December 2023 data.
