BAM Key Details:  

  • The quarterly Wall Street Journal/® Emerging Housing Markets Index was released this week, with smaller midwestern metros dominating the list.
  • None of the 20 markets are in the pricey West Coast region. 

We have excellent news for real estate agents in the Midwest, as well as for buyers and real estate investors shopping for affordable homes in up-and-coming markets. 

The quarterly Wall Street Journal/® Emerging Housing Markets Index is out. And seven of the top 10 markets on the list are smaller Midwest metros with robust economies and more affordable housing.

These markets are bargains for real estate relative to other areas in the country. Home prices are still high, climbing on a year-over-year basis. Mortgage rates are down from their peaks but still high. Budgets are stretched because of inflation. So buyers are looking for affordability, and they’re finding it overwhelmingly in the Midwest, South, and pockets of the Northeast. These are markets where workers can find jobs if they’re looking. 

Danielle Hale Chief Economist

What is the WSJ/® Emerging Housing Markets Index? 

The index offers a snapshot of the real estate markets that WSJ and® believe will outperform others in the months ahead. 

Out of the 300 largest U.S. metro areas, the index identifies the strongest options for both buyers and real estate investors based on the following criteria:  

  • The index also takes the following factors into consideration: 

    • Median days on market
    • Property taxes
    • Percentage of foreign-born residents

For the sake of clarifying terms, each metro includes the main city and its surrounding towns, suburbs, and smaller urban neighborhoods. 

The top 20 emerging housing markets in winter 2023

Now that you have the context for the list, here are the top 20 emerging real estate markets in winter 2023, along with each metro’s median home price:

  1. Lafayette, IN: $299,900
  2. Fort Wayne, IN: $269,900
  3. Elkhart, IN: $247,000
  4. Topeka, KS: $224,900
  5. Johnson City, TN: $376,018
  6. Columbia, MO: $339,900
  7. Kingsport, TN: $299,950
  8. Savannah, GA: $399,900
  9. Columbus, OH: $329,450
  10. La Crosse, WI: $359,900
  11. Manchester, NH: $495,000
  12. Burlington, NC: $349,000
  13. Portland, ME: $550,000
  14. Knoxville, TN: $429,000
  15. South Bend, IN: $274,900
  16. Sioux City, IA: $302,475
  17. Springfield, IL: $162,450
  18. Springfield, MO: $314,900
  19. Milwaukee, WI: $375,000
  20. Rapid City, SD: $402,500

Why Lafayette, Indiana Ranks #1

Unlike fall 2022, not one of the markets on the winter 2023 list is in the pricey West Coast region. In fact, the top three emerging markets are in Indiana, with Lafayette at number one. 

Two hours southeast of Chicago and about an hour northwest of Indianapolis, Lafayette is home to Purdue University and a lively manufacturing sector, with employers like Subaru, Caterpillar, and Wabash National Corp. (which makes, among other things, refrigerated truck trailers). 

Another huge draw is their affordable housing. The median home price for Lafayette stood at $299,900 in December 2022—roughly $100,000 less than the U.S. median—making the area exceptionally attractive to cash-strapped home buyers. 

More good news for buyers? The number of homes for sale rose 58.7% year over year, and they’re spending 20 days longer on the market. 

That said, prices went up 33.3% year over year in December. And as word gets out about Lafayette’s virtues, those price increases are likely to continue if inventory can’t keep up. 

For now, about two-thirds of home buyers shopping in the Lafayette area are from other parts of the U.S. And roughly half of the online home shopper traffic is coming from Chicago, Indianapolis, and New York City. 

Danielle Hale,® Chief Economist, expects demand for homes in the Lafayette metro to remain strong, thanks to its robust manufacturing industry. 

After the [COVID-19] pandemic, there is a focus on rethinking far-flung global supply chains,” following the delays and problems getting goods from abroad. The renewed attention on domestic manufacturers is going to be a trend we’ll see over the next couple of years.

Danielle Hale Chief Economist

Top takeaways for real estate agents

If you serve one of the top 20 metros on the Emerging Housing Markets Index, you’re probably familiar with your area’s most attractive qualities. 

Chances are also decent that renting in your market costs less than the national average—meaning any prospects you help find more affordable rentals (until they’re financially ready to buy a home) will be better able to save money for a down payment.  

Focus on being as helpful as possible to home shoppers in your market—and you’ll gain trust in no time.