Don’t Buy a House in These 5 US Cities That Have Shrinking Populations and Fewer Buyers
Savvy homebuyers know that location is virtually everything in the quest for the perfect property. But one thing you might not consider is the population in a given city affecting the resale value of your home if you decide to sell.
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The U.S. Census Bureau reported that nearly half of the 30,000 cities in the U.S. will experience population loss by the end of this century. Overall, the population is likely to increase to 366 million by 2100, which shows the population is not growing as quickly as it has in past decades.
The decline in population in urban areas, though, isn’t just about people being born; population decline in cities indicates people are moving to suburban and rural areas.
With fewer prospective buyers and fewer people moving into cities, home prices in these metros may decline in coming decades. Home values in shrinking cities depreciated by 2.7%, on average, compared to a 3.8% appreciation in growing cities, according to a Freddie Mac study reported by InsiderMonkey.com.
Shrinking populations could have other economic side effects, too, including less consumer spending, fewer businesses, and a loss of jobs.
If you want to move to an economically healthy city, increasing the odds that your home investment will appreciate, avoid these five cities.
Detroit, Michigan
Since the 1950s, when Detroit was the fifth largest U.S. city, this metropolis best known as the home to major U.S. auto manufacturers has lost 61% of its population. In the past five years, the population has declined by 7.83%, according to InsiderMonkey.com.
In spite of population loss, studies indicate that home values are rising In Detroit. Residential property values jumped 23% in 2023, according to The Detroit News. In the past seven years, the value of homes has tripled.
However, just because Detroit has, so far, bucked the trend of falling property values as the population declines, that doesn’t mean it will continue. Purchasing a Detroit home now could mean you’ll lose money if you decide to sell over the next few decades.
Birmingham, Alabama
Despite its warm climate and proximity to the picturesque Gulf Shores, Birmingham’s population continues to decline at a rate of 7.7% in the past five years, InsiderMonkey.com reported. As in other major cities, people are moving to the suburbs and out of the city center.
Home prices in Birmingham have been rising, according to Redfin, but the median sale price sits 52% below the national average. Homes stay on the market an average of 46 days, and the average home sells for 3% below the asking price. If this trend continues, it could become harder to sell a home in Birmingham.
St. Louis, Missouri
St. Louis, Missouri, has lost 7.14% of its population in the past five years, due to a variety of factors. InsiderMonkey.com cited a high crime rate, tight job market, and the migration of residents to surrounding suburbs as some of the key reasons for urban migration.
Home prices in St. Louis have already started to drop, with prices down 3.9% in March 2024 compared to March 2023, based on Redfin statistics.
Baltimore, Maryland
Baltimore’s population has dropped by 6.82% in the past five years, according to InsiderMonkey.com. The city’s population is the lowest it’s been since the 1910s. Rising crime rates, job loss, and suburbanization have contributed to the decline.
Yet, Baltimore has not yet fallen victim to falling home prices. Its proximity to Washington, D.C. could contribute to homes maintaining their value. Prices have risen 7.6% since last year, according to Redfin data. However, home prices may not stay elevated as the population continues to decline.
Cleveland, Ohio
Cleveland has experienced a population decline of 6.2% over the past five years. Like other cities in the Midwest, Cleveland fell victim to the decline of heavy industry and the trends of suburbanization and urban sprawl. In the 1980s, it lost its position as one of the 10 most populated U.S. cities.
Home prices have risen 24.5% between March 2023 and March 2024, which could be an indication of revitalization. Homes are also selling faster, spending just 33 days on the market compared to 41 days last spring. You don’t want to overspend on a house in this city, though, because you could be stuck if you try to sell in future decades.
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This article originally appeared on GOBankingRates.com: Don’t Buy a House in These 5 US Cities That Have Shrinking Populations and Fewer Buyers
