High mortgage rates, low inventory, and stagnating — or in some cases declining — home values are making for a challenging housing market in 2023.
Still, buyers can find plenty of markets with appreciating home values and high projected inventory. Based on Insurify’s research and analysis, here are the “markets to watch” — locations primed for success in the next few years.
Key housing market trends in 2023
Sun Belt states continue to be promising for new homebuyers, with cities in Florida, North Carolina, and South Carolina dominating most of the top 20 cities with home markets to watch.
Sarasota, Florida, is Insurify’s top market to watch. Sarasota has 1,500 residential units under construction, providing new inventory for its burgeoning population. The city has experienced a 6.9% increase in population since 2020 — the second-highest compared to other cities on the list.
Riverside, California, which placed No. 20 on Insurify’s list of markets to watch, presented the best market for young families looking for good school districts. With a high school graduation rate of nearly 97%, the city is a great option for parents looking to buy a home in a promising market with a strong school system.
The No. 2 housing market to watch, Greensboro, North Carolina, had the most year-over-year increase in new housing developments, with a whopping 148% increase. Greensboro still falls behind other cities on the list in terms of new housing developments per homeowner, so prospective homebuyers should consider moving fast if they want to find a suitable property in the area.
Florida regions that placed high on Insurify’s list of markets to watch, including Miami, Sarasota, and Fort Myers, saw the highest home insurance rates compared to other cities on the list. Prospective homeowners should bear in mind the sky-high cost of home insurance in Florida when making a purchase.
Cities in Florida, Texas, and California with a high risk of damage from natural disasters continue to see an astounding increase in new housing developments. All of the top 10 cities with the highest number of new units per 100,000 homeowners have high FEMA risk ratings, ranging from “Relatively High” to “Very High.”
Cities in Florida and North Carolina top the list of markets to watch in 2023
To identify housing markets primed for growth, Insurify’s analysts looked at each city’s average home value appreciation, the increase in new housing units year over year, the ratio of new housing units to homeowners, and population changes. Below is the list of the top 20 cities with home markets to watch.
1. Sarasota, FL
Average home value: $458,659
New units per 100K homeowners: 218.37
Average cost of homeowners insurance: $3,264
Despite the high cost of home insurance in Florida, with Sarasota residents paying 80% more than the U.S. annual average of $1,812, affordability may contribute to the city’s booming market. The metro area’s mortgage-to-income ratio is 19.5% compared to the national average of 23.3%, according to a Q1 2023 report from the National Association of RealtorsⓇ.
New units built in the metro area increased by 24% between June 2022 and June 2023, and with numerous affordable lots of undeveloped land, Sarasota has room to grow. Potential buyers may want to move quickly. The metro area’s population spiked nearly 7% between 2020 and 2022, compared to 0.6% nationwide.
Centrally located between Tampa and Fort Myers, Sarasota is full of locally owned restaurants and family-friendly entertainment amid a scenic natural landscape. Residents have numerous options for outdoor recreation, from Siesta Key Beach to Myakka State Forest.
2. Greensboro, NC
Average home value: $243,540
New units per 100K homeowners: 109.74
Average cost of homeowners insurance: $1,200
Downtown Greensboro’s development plans include increasing public transportation, leveraging the scenic greenway to connect unique districts, and building a 3,000-to-5,000-seat multi-use arena by 2030. Residential development is also booming, with a 148% year-over-year increase in new units in the metro area.
At less than $250,000, Greensboro’s average home value is 28% lower than the U.S. average of $348,853. Residents also pay 34% less for homeowners insurance than the U.S. average. Greensboro home values increased 6% year over year compared to 1% nationally, so buying property in this steadily growing city could be a smart investment.
As the third-largest city in North Carolina, Greensboro boasts numerous amenities, including boutiques, art galleries, local breweries, and trendy new restaurants in its walkable downtown. The city’s strong public school system is also a draw for families.
3. Raleigh, NC
Average home value: $433,469
New units per 100K homeowners: 178.73
Average cost of homeowners insurance: $1,128
Raleigh-Durham-Chapel Hill is dubbed the Research Triangle, as it’s home to Duke University, North Carolina State University, and the University of North Carolina at Chapel Hill. The highly educated workforce attracts technology and biotech companies, making Raleigh the fifth-hottest labor market in The Wall Street Journal’s 2023 annual rankings of nearly 400 metro areas.
The average home value in Raleigh is 24% higher than the U.S. average, but due to a thriving job market, the mortgage-to-income ratio is lower, at 17.1% compared to 23.3% nationally, according to a 2023 report from the National Association of RealtorsⓇ. Higher prices aren’t quelling demand, and developers are taking notice. The metro area saw a 62% year-over-year increase in new units.
In addition to numerous restaurants, shops, breweries, and performing arts venues, the aptly nicknamed City of Oaks has more than 200 parks featuring playgrounds, pools, dog runs, and tree-lined trails.
4. Fort Myers, FL
Average home value: $402,445
New units per 100K homeowners: 191.13
Average cost of homeowners insurance: $2,568
Located on Florida’s Gulf Coast, Fort Myers balances urban amenities and outdoor recreation. The area boasts more than 590 miles of shoreline and 50 miles of white-sand beaches.
The Fort Myers metro area population surged 8.1% between 2020 and 2022, compared to 0.6% nationally, but new units built decreased by 14%. Although Fort Myers has a “Relatively High” climate risk acording to the Federal Emergency Management Agency, which makes homeowners insurance pricier, competition could increase as new residents flock to the area.
Fort Myers is popular with retirees, with nearly 22% of the population over age 65. The city’s numerous options for waterfront dining, nightlife, parks, and community events also appeal to young professionals and families.
5. Orlando, FL
Average home value: $388,191
New units per 100K homeowners: 177.35
Average cost of homeowners insurance: $2,460
The average home value in Orlando is nearly $40,000 greater than the national average of $348,853, but homeowners in the region are seeing their investments appreciate. The average total equity gained in one year in the Orlando metro area is $26,642 compared to $7,042 nationwide, according to 2023 National Association of RealtorsⓇ data.
Influenced by the city’s high risk of natural disasters, homeowners insurance prices in Orlando are high. Residents pay an annual average of $2,460, nearly 36% more than the national cost of $1,812. However, nightlife, dining, entertainment, and outdoor recreation options are plentiful in Orlando, drawing homebuyers to the region.
The Orlando–Kissimmee–Sanford metro area also has a strong job market, with a March 2023 unemployment rate of 2.6% compared to the national average of 3.5%, according to the National Association of RealtorsⓇ. Disney is the largest employer in the state, with approximately 75,000 employees at the Walt Disney World Resort.
Cities in Florida, Texas, and California are still attracting new developments despite severe climate risks
Cities with some of the highest risks of natural hazards in America are also some of the cities with the highest number of new housing units under construction, according to Insurify’s analysis of data from the U.S. Department of Housing and Urban Development and FEMA.
Of the top 10 cities with the highest number of new residential units per 100,000 homeowners, San Jose, California, and Houston, Texas, stand out as the cities with the highest risk overall, with each earning a “Very High” FEMA risk rating.
While Houston saw a 28% decrease in new housing units between 2022 and 2023, San Jose saw an astronomical 163% increase — despite being the only city on the list with a negative population growth between 2020 and 2022.
Severe weather is influencing where homebuyers choose to live. “There are a lot of people moving from the West Coast due to wildfires. I have personally helped three families relocate from California in the past year. Their main reason for moving was the wildfires that impacted California last year,” says Kendra Wilson, a realtor in the Tampa Bay area.
However, Tampa has its own risk of severe weather. The city is the No. 16 housing market to watch but ranks “Very High” on FEMA’s risk index. While Tampa Bay has dodged the worst of numerous natural disasters, including Hurricane Ian in 2022, heavy rainfall from Hurricane Idalia flooded the streets in August 2023.
A high risk of climate change drastically drives up home insurance premiums, and in some states, such as California and Florida, insurers have pulled out of the state entirely. Florida, in particular, has the highest home insurance rates in the country, largely due to the high costs associated with damages from hurricanes. Climate risks explain the higher-than-average rates for Sarasota, Fort Myers, and Orlando.
With more mortgage lenders beginning to use climate change as a factor in their underwriting, as Fannie Mae plans to, homebuyers should assess the threat of climate change to their prospective property before making a decision.
Good school districts attract families to these booming markets
Strong public schools are a significant motivator for homebuyers, with 23% reporting that the quality of the school district influenced their neighborhood choice in a 2022 National Association of RealtorsⓇ survey. The rate climbs to 30% between ages 23 to 31 and peaks at 40% between ages 32 and 41.
While homebuyers may initially need to spend more for a home in certain districts, good public schools could lead to long-term savings. The average annual tuition for K–12 private schools is $23,839, according to the Education Data Initiative.
Several of the top 20 housing markets to watch have robust school systems, highlighted below using data from the National Center for Education Statistics, local school districts, and the U.S. Department of Education. Student-to-teacher ratios and graduation rates represent each city’s largest public school district.
Riverside, CA
Largest school district: Riverside Unified School District
Student-to-teacher ratio: 24:1
District high school graduation rate: 97%
State high school graduation rate: 83.6%
Riverside ranks 20th as a top homebuyer market to watch, and a strong public school system is a major part of the draw. Educating approximately 40,000 students across 50 schools, Riverside Unified is the largest district in the city and the 16th largest in the state. RUSD’s four-year high school graduation rate is 97%, significantly greater than the national average of 87%.
Riverside Unified also has a robust special education program, with more than 250 dedicated staff members supporting students with learning or physical disabilities. The district’s graduation rate for students with disabilities is 85.7%, compared to 75% nationwide.
Greensboro, NC
Largest school district: Guilford County Schools
Student-to-teacher ratio: 15:1
District high school graduation rate: 91.8%
State high school graduation rate: 86%
Greensboro has a strong public school system with a low student-to-teacher ratio and a high school graduation rate that surpasses the North Carolina average by nearly 6%. As the third-largest district in the state, Guilford County Schools serves nearly 70,000 students across 126 schools.
The district has more than 30 Advanced Placement and 260 career and technical education courses in culinary arts, nursing, automotive technology, and more. High schoolers can earn two years of free college credits. If students stay local for college, the well-regarded University of North Carolina at Greensboro’s in-state tuition is $7,498 versus $22,657 for out-of-state students.
Raleigh, NC
Largest school district: Wake County Public Schools
Student-to-teacher ratio: 15:1
District high school graduation rate: 89.6%
State high school graduation rate: 86%
Raleigh’s Wake County Public Schools serve nearly 162,000 students, making it the largest public school system in North Carolina and the 14th largest nationally. The district’s high school graduation rate has significantly improved over the past decade, up to nearly 90% from just under 80.6% in 2012, and surpasses the state average of 86%.
Every Wake County middle and high school has a career development coordinator. The district also has several career academy high schools focusing on various paths, from information technology to creative design. In these smaller learning communities, students participate in job shadowing, career fairs, industry tours, and a 120-hour internship program.
Miami, FL
Largest school district: Miami-Dade County Public Schools
Student-to-teacher ratio: 19:1
District high school graduation rate: 88.2%
State high school graduation rate: 87.3%
Miami ranks 12th on Insurify’s list of top housing markets to watch. The city’s public schools, which surpass state and national graduation rates, attract families to the area. Miami-Dade County’s school system is the third-largest district in the nation, educating approximately 350,000 students.
In 2022, Miami-Dade’s eighth graders surpassed average proficiency scores in reading and mathematics for students in large cities, according to Trial Urban District Assessment reports from the National Assessment of Educational Progress (NAEP). The district’s graduation rate is on par with state and national averages, leading both by 1%.
Orlando, FL
Largest school district: Orange County Public Schools
Student-to-teacher ratio: 18:1
District high school graduation rate: 87%
State high school graduation rate: 87.3%
Orlando is the fifth top housing market to watch. In addition to numerous amenities and job opportunities, the city’s strong public schools appeal to families. Orange County Public Schools is the eighth-largest district in the nation and the fourth-largest in Florida, educating nearly 209,000 students across 210 schools.
The district’s overall high school graduation rate, including charter schools, is on par with the state average, at 87%. However, for traditional high schools, the rate reaches 95.9%. Specialized magnet schools offer programs for aviation, culinary arts, medical careers, and more at 33 schools, and dual-enrollment classes allow students to earn college credit.
Investors are pushing homebuyers out of hot markets
Homebuyers aren’t competing with only one another. In June 2023, investors accounted for 26% of all single-family home purchases, according to data from CoreLogic. Investors are buying more homes in the West, lower Midwest, and South, Q1 2023 data shows.
Becky McGrath, realtorⓇ and broker with Cottingham Chalk, noticed this trend in Charlotte, North Carolina, the 10th top housing market to watch. “We’ve had a lot of national investment firms coming in,” said McGrath. “It’s a real problem. These young [homebuyers] want the American dream, and they can’t compete with cash offers from investors.”
In McGrath’s experience, homebuyers with a lower price range are most affected, though competition slowed once mortgage rates more than doubled from an all-time low of 2.65% in January 2021.
“At one point, we put two little houses [...] up in the $300,000 range, and they were in pretty bad shape,” said McGrath. “We had about 40 offers on each house, and well over half were from investors.”
In hot markets, these investor offers drive up housing costs. The median purchase price in states where companies and corporations bought at least 13% of houses was $180,572 in 2021. This price is 15% higher than the $156,920 median in states where institutional buyers represented less than 13% of purchasers, according to a 2022 report from the National Association of RealtorsⓇ.
How to buy a home in a competitive market
Buying a home isn’t an easy process. With rising interest rates and steep competition from investors, it’s important to stay equipped and have a game plan. When buying a home, keep the following tips in mind:
Get pre-approved for a mortgage. Before you start looking at homes, speak to at least one lender to secure a pre-approval letter. The lender looks at your credit score, income, and assets to determine how much you can borrow and estimate your interest rate.
Don’t dismiss a house that needs a little TLC. “A lot of people will overlook houses that are really solid, but they need a little updating,” said McGrath. “Everybody wants the house that’s move-in ready and looks like it’s out of a magazine, but you’re going to be competing really heavily for that. [Looking at] houses that are on good lots with good bones and making changes later has been key for a lot of my clients.”
Find a well-connected agent who knows your target market. Realtors, agents, and brokers who have a strong network of contacts can hunt down houses that meet your criteria before they’re publicly listed. Local agents who primarily work in your desired area will be more familiar with neighborhoods that suit your needs.
Budget to pay over asking. Although the market is slowing down as mortgage rates rise, more than half of homebuyers paid an average of 5.6% more than the seller’s list price in May 2023, according to a Bright MLS survey spanning the Mid-Atlantic region.
Be patient. Finding your dream home in a competitive market probably won’t happen overnight. “Sometimes, it takes a little time to find what you want, and you have to have the patience to bid multiple times,” advised McGrath.
Data methodology
Data scientists at Insurify leveraged data from the U.S. Census Bureau, Zillow, and their internal database of home insurance quotes to identify the top home markets to watch in 2023.
Insurify’s data team identified year-over-year home values, 2024 home value forecasts, population changes, and newly approved residential construction projects as the key factors to illustrate home markets most likely to see a surge in demand heading into 2024.
Specifically, they looked at the following metrics for the 75 largest metropolitan areas by population in 2023:
Change in the average home value between June 2022 and June 2023
Zillow’s forecasted change in the average home value between June 2023 and June 2024
Change in overall population between 2020 and 2022
Number of housing units included in new, private residential construction permits issued in June 2023, adjusted for the number of residents living in owner-occupied housing units
Change in the above metric between June 2022 and June 2023
Insurify data scientists compiled these metrics into a single score to represent a market’s overall potential for soaring demand in 2023 and 2024, with a metropolitan area scoring higher for having increasing year-over-year home values, an increasing home value projection for 2024, an increasing population between 2020 and 2022, a higher number of new housing units approved for construction relative to the area’s non-renter population, and a year-over-year increase in the number of new housing units approved for construction relative to the area’s non-renter population.
All population, owner-occupancy, and residential construction permit data featured in this report comes from the U.S. Census Bureau. Data on average home values, changes in home values over time, and home value forecasts comes from Zillow’s housing data. Lastly, data on average home insurance costs comes from Insurify’s proprietary data of home insurance quotes. These premiums are real quotes that come directly from Insurify’s 50+ partner insurance companies in all 50 states and Washington, D.C.