Housing markets nationwide struggled with historically strained affordability this year, but according to a report in Realtor.com, a handful of smaller, more budget-friendly metro areas stood out by offering buyers the opportunity to become homeowners without busting the piggy bank.
These so-called “refuge markets,” are mostly concentrated in the traditionally affordable Midwest and posted some of the year’s strongest price gains, Realtor.com said.
Their success is fueled in part by an inflow of home shoppers on a budget, the report said.
Realtor.com Senior Economist Jake Krimmel said that these few markets are set apart by the fact that the average buyer still can afford a home there, unlike in some of the larger, more expensive metros in which have high prices and mortgage interest rates stuck in the low 6% range have put homeownership out of reach for many.
“November’s data show how these affordable metros have become magnets for cost-conscious movers and how this shift is reshaping the geography of U.S. housing demand,” Krimmel said.
Many Homebuyers are Moving ‘Down Market” to Save
Realtor.com said that buyers have been flocking to refuge markets since 2022.
That’s when mortgage rates crossed the 6% threshold after a COVID-19 pandemic price surge made buying a home even less feasible.
Krimmel said that for many lower-income buyers, the only way to attain homeownership without becoming house-poor was to move “down-market” and focus on metro areas where prices were 20% to 30% below the national median to offset the soaring financing costs.
The Midwest Has the Most ‘Refuge Markets’
Realtor.com said that the top 10 refuge markets have seen the biggest annual increases in median list price per square foot—and most have experienced double-digit growth in the teens and low 20s since 2022.
For example, Grand Rapids, Michigan, realized the largest year-over-year rise in the price per square foot, at 5.5%—and an appreciation rate of over 15% compared to three years ago.
Grand Rapids, St. Louis Lead the Way
In November, the typical home in Grand Rapids cost $389,900, or more than $25,000 off the national median, Realtor.com said.
The report said that a two-bedroom in Grand Rapids, Michigan, has an asking price of just $245,000.
St. Louis emerged as the second most popular refuge market, with the price per square foot there jumping 5% year over year and nearly 8% over three years.
“We have phenomenal infrastructure in place, and we have a great history,” Tommy Espenschied, with ReeceNichols Real Estate in St. Louis, told Realtor.com. “There are a lot of great attractions, entertainment, amazing food, and really beautiful homes with lots of options.”
Buyers looking for an urban lifestyle tend to choose homes within St. Louis’ inner city, while those who want more outdoor space focus their search on the suburbs.
Espenschied said there has been a lot of interest from home shoppers as far away as Los Angeles and the San Francisco Bay Area, who he said tend to buy larger, more expensive properties in town.
“When you see how far your dollar can go, it definitely attracts a lot of people,” he said.
Midwest Prices Far Lower Than Those on West Coast
The typical home in St. Louis came with a $291,900 price tag in November—nearly one-quarter of the median price in L.A.
St. Louis is also drawing strong homebuyer traffic from Chicago, New York City, and Denver, Epenschied said.
“One of the beautiful things about St. Louis is that you can live 25 miles outside of the city of St. Louis, and it might only be a 40-minute drive in the morning, which is certainly not the case if you’re coming from L.A., San Francisco, New York, or Chicago, where going a couple of miles is quite a hassle,” he said.
St. Louis’ inventory has tightened over the past two years and that has put upward pressure on prices, but Epenschied said that most buyers have adjusted to this “new normal.”
“If you’re willing to do a little bit of work, there’s actually some really solid inventory out there,” says Espenschied. “There are some very beautiful projects to be done here in St. Louis, and that would be the best opportunity to really build equity into whatever deal you’re looking for.”
Realtor.com said that Cleveland, Ohio, saw the third-highest year-over-year increase in the price per square foot, at 4.5%—and the second highest since 2022, exceeding 20%. The median price there was $250,000 in November, making it one of the most pocketbook-friendly housing markets in the U.S.
Mike Valerino, CEO of Akron Cleveland Association of Realtors, told Realtor.com that affordability remains Cleveland’s strongest draw, with more than 63% of all households in the metro being able to afford the typical home.
“Buyers gain not just lower prices but a higher likelihood of qualifying for a mortgage, and more living space for the same or lower monthly cost than in higher-priced metros,” he said.
Another popular Midwestern hub, Milwaukee, Wisconsin, came in fourth. The median price per square foot there has surged more than 21% since 2022.
Pittsburgh, which is the nation’s most affordable housing market with a median price below $250,000, grabbed the fifth spot in the ranking with a 3.7% year-over-year price increase, tied with Buffalo, New York (+3.7%) and Louisville, Kentucky (+3.7%) and followed by Providence, Rhode Island (+3.4%); Cincinnati, Ohio, (+2.9%); and Virginia Beach, Virginia (+2.1%).
“This is part of a larger trend relating to affordability and the geographic reshuffling of housing demand,” Krimmel said. “Refuge markets reveal how families adapt when traditional paths to affordability narrow. In a high-rate, high-price environment, demand shifts to metros where the math still works.”
