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Home prices are rising faster in the middle of the U.S. as Covid drives people away from coasts

Homes in Memphis, Tennessee.

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Home prices are rising across the nation, but the Covid pandemic is turning the usual geographical trends on their heads.

Home values have historically risen most sharply in large cities on the coasts, where supply is leaner and demand is stronger. That is no longer the case.

Smaller metropolitan markets like Pittsburgh, Cleveland, Cincinnati, Indianapolis, Kansas City, Boise, Idaho, Austin, Texas, and Memphis. Tennessee are seeing some of the strongest price gains in the nation now, according to the Federal Housing Finance Agency. Prices in those cities are now at least 10% higher than with a year earlier.

These have all been historically more affordable markets, and markets that generally have more inventory of homes available for sale. That makes the suddenly strong price growth in the middle of the country that much more striking.

Much of it is likely to do with the new ability to work from anywhere due to the coronavirus. People are leaving larger more expensive metropolitan markets and heading to less expensive markets where they can get more space and land for their money.

“Although the full history of the pandemic’s impact on housing prices is yet to be written, the data from the last several months are consistent with the view that Covid has encouraged potential buyers to move from urban apartments to suburban homes,” said Craig Lazzara, managing director at S&P Dow Jones Indices.

Cleveland, Ohio

Henryk Sadura | Flickr | Getty Images

Nationally, home prices rose a remarkable 8.4% in October from a year earlier on the S&P Case Shiller Index. That’s up from a 7% gain just the month before and is the large