Why millions of Americans are flocking to invest in Rust Belt real estate
For several years now, Midwestern cities have consistently ranked among the best places to live in the U.S. The region has seen major booms in its housing markets, and cities such as Cincinnati, Ohio; Milwaukee, Wisconsin; and St. Louis, Missouri, are experiencing large demand in the upper tier of their markets and seeing homes sell at a much faster rate than the national average.
A list published by Realtor.com in August 2024 placed three Midwestern ZIP codes among 2024’s top 10 areas for real estate sales. The annual list is compiled according to which areas see homes sell the fastest and receive the most listing views. Properties in these areas took an average of 13 days to sell-far quicker than the national average of 42.
According to the study, asking prices in cities that made the list grew by an average of 7.4% in the first half of 2024. compared with a national median listing price growth of just 0.4%. And while real estate inventory grew, it was offset by high demand and quick sales. This meant the number of homes for sale increased by only 5.7% in these areas. compared to the U.S. six-month average of 24.7%.
Midwestern states are drawing a number of homebuyers who want to return to their roots. According to a report published by the National Association of Realtors in November 2024, 18 percent of homebuyers surveyed had moved back to an area in which they previously lived, and this was most common among those moving to the Midwest.
For families, Midwestern cities offer excellent schools and an abundance of universities, as well as an environment conducive to outdoor activities. Meanwhile, for those in the early and middle stages of their lives and careers, economic opportunities remain strong. A 2023 Forbes article, “‘Silicon Prairie’: Why the Midwest Is Becoming a Thriving Hub for Fintechs,” noted that five of the top states for starting a business that year were Midwestern-Indiana, North Dakota, South Dakota, Illinois and Ohio. (Following this trend, Sotheby’s International Realty opened its first office in South Dakota in December 2024.) With a particular focus on the tech sector, the article drew a direct correlation between the relatively lower cost of living in these states and their desirability among those with the talent and ability to start new companies. It also pointed out that the local talent pool in these areas is bolstered by the presence of some of the country’s best universities.
Paul Handle, managing director, Mahler Sotheby’s International Realty based in Milwaukee, Wisconsin, says that his region is currently undergoing a “renaissance of sorts” in terms of luxury real estate. “Luxury buyers are increasingly looking at the Midwest because of the incredible value they receive compared with coastal cities. They can purchase expansive properties, often with unique architectural details or waterfront access, for a fraction of the cost they would pay in New York, Los Angeles or Miami. Beyond price, there’s the appeal of a slower pace of life, lower property taxes and more predictable environmental conditions.”
“THE MIDWEST HAS THE APPEAL OF A SLOWER PACE OF LIFE AND LOWER PROPERTY TAXES” -Paul Handle, managing director, Mahler Sotheby’s International Realty
Handle notes that homes in the luxury segment of Milwaukee’s market range from US$400 to US$1,000 per square foot, depending on the neighborhood and site. “Waterfront properties, especially on Lake Michigan, and penthouse units in downtown condos command prices at the higher end of that spectrum, while homes in more suburban luxury developments may be priced more modestly,” he says. “Lake Geneva in Wisconsin can see even higher prices per square foot due to the desirability of lakefront property.”
Luxury buyers “get more space and property for their money without sacrificing access to cultural or economic opportunities,” says Handle. “Milwaukee is home to excellent museums and a thriving art and food scene. The cost of living is significantly lower than in coastal cities, while still providing access to high-end properties near Lake Michigan, in western suburbs and in Lake County. The pace of life is more relaxed and the sense of community is strong, with many returning residents citing a desire to be closer to family and friends.”
In the prestigious University Club Tower in Milwaukee, Wisconsin, this full-floor residence features spacious living areas, sophisticated design, and spectacular views of the lakefront and the vibrant cityscape
Data backs up Handle’s cost-of-living analysis. The Council for Community and Economic Research’s (CER) Cost of Living Index, published in August 2024, shows that the country’s most affordable states sit squarely in the Midwest and the South. Its research takes into account data on housing prices, utilities, transportation and health care, based on government survey data about the expenses for professional and executive households.
Though “bang for your buck” is surely a factor-properties in the Midwestern ZIP codes that made the list were priced on average 24.6% lower than the national median-the unemployment rates in these regions are also some of the lowest in the country, an indication of strong regional economies. As the study detailed, “While some buyers are looking for a deal in a given area, others are less concerned about keeping the price low, whether because they are making a move from a higher-priced area or because they are cashing in on their existing home equity and looking to upgrade. Pricier markets also may be especially attractive to high-earning buyers looking to relocate from a bustling business hub to somewhere with a more holistic appeal.”
Rural Midwestern communities have seen a spike in population since 2020. when the COVID-19 pandemic shifted many people to remote working, but urban Midwestern locales have seen booms in both their populations and the job vacancies that predate the pandemic are continuing to rise. In 2019, the Manhattan Institute, a New York-based think tank that focuses on urban policy identified 10 Midwestern cities that were growing both economically and demographically at a rate much faster than the national average.
In addition to population and jobs growth, the cities identified in this study— Cincinnati, Ohio; Columbus, Ohio; Des Moines, lowa; Fargo, North Dakota; Grand Rapids, Michigan; Indianapolis, Indiana; Kansas City, Missouri; Lexington, Kentucky; Madison, Wisconsin; and Minneapolis-Saint Paul, Minnesota— also fared better in terms of GDP per capita and college-degree attainment. Today, many of these cities continue to see significant population increases, with the three fastest growing among them-Des Moines, lowa; Indianapolis, Indiana; and Madison, Wisconsin-seeing their resident numbers rise between 2% and 3.1% from 2020 to 2023, according to U.S. Census data released in March 2024.
“For those seeking cities with fewer of the challenges that come with larger metropolitan areas, several other exceptional options are available,” says Kathe Barge, associate broker and global real estate advisor, Piatt Sotheby’s International Realty in Pittsburgh, Pennsylvania.
An open living room with a wall of windows is the heart of this spacious custom-built oasis in- Maple Grove, Minnesota.
Speaking about her native Pittsburgh, Pennsylvania, Barge adds that “both the city and its surrounding suburbs are seeing a rise in high-end condominium developments and upscale residential communities, offering prospective buyers an appealing mix of historical charm and modern convenience. These new developments are elevating Pittsburgh’s reputation as a destination for luxury living, with a growing number of options for those seeking contemporary luxury amid the city’s rich cultural landscape.”
Barge says many of the newcomers she sees fall into three categories. The first is returning Millennials-those born between the early 1980s and the late 1990s—who were raised in the region, spent time elsewhere and are seeking a more manageable pace of life and more substantive real estate opportunities. Then there are people from the West Coast who are attracted by the region’s growing tech scene, affordable real estate, good schools and lower childcare costs. Finally, there are returning retirees, who left the region for work and are now “seeking the comfort of familiar surroundings, an affordable lifestyle and the benefit of not paying state income tax on retirement earnings.” Barge adds that luxury real estate opportunities in Pittsburgh as of September 2024 ranged from US$600 to US$1,100 per square foot.
It is clear that the Midwest’s luxury market isn’t just about the cost of property; it is also about investing in a region poised for continued transformation and success. These communities allow their residents to look ahead toward carving out a stable future, with room to grow and a lifestyle suited to their needs.
