Income Growth, Construction Lag Fuel Divergent Home Prices Nationwide; Migration Turbocharges Sunbelt
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Mortgage rates are a major factor affecting home prices, but don't fully explain divergence across markets. Income growth and new construction are bigger long-term drivers.
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Since 2020, migration of higher-earning remote workers and retirees to affordable areas like Florida and the Sunbelt has turbocharged price increases there.
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Prices rose fastest from 2011-2020 in places combining high income growth and low construction, like Boise and Austin. Slow-building cities with weaker income growth lagged.
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The 2020-2022 spike was again led by high-wage cities, especially in Florida. Supply shortages nationwide, despite lower sales, are propping up prices.
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Some formerly hot markets like Boise and Phoenix have cooled due to unaffordability. But many still boast near-peak prices, though recession could reverse the fundamentals.