As Southern Markets Stall, the Midwest Holds Steady

In the past decade, investors flocked to the Sun Belt, drawn by population growth, warm weather, and the post-pandemic migration wave. But today, cracks are showing in that once-hot market.

A recent Bloomberg article highlights what many investors have started to realize: homes are getting harder to sell in the South. Inventory is piling up, time on market is increasing, and price cuts are becoming more common.

Meanwhile, the Midwest, long considered the steady but unspectacular player, is showing signs of strength, resilience, and opportunity.

Let’s take a closer look.

1. The Sun Belt Slowdown Is Real

According to Bloomberg, 8 of the 10 US metro areas with the biggest increase in unsold homes year-over-year are in the South. In places like North Port, FL and Cape Coral, FL, active listings surged more than 50% in the past year.

Price cuts are also climbing. In Tampa, 41.6% of listings had a price reduction in May. In New Orleans, it was over 45%. Homes are taking longer to sell and buyers are regaining leverage.

It’s not just a temporary shift, it’s a signal that overheated markets may be returning to earth.

“The pandemic-era boom in parts of the South drove prices far above local income levels, creating long-term affordability issues,” notes Redfin’s Sheharyar Bokhari.

2. The Midwest Offers Affordability and Stability

In contrast, the Midwest is standing out for its affordability, steady demand, and resilient price trends. Take cities like Cleveland, Columbus, Indianapolis, and Kansas City:

• Lower volatility: Home price growth in the Midwest has been more modest, which means these markets didn’t overheat and aren’t facing dramatic corrections.
• High rent-to-price ratios: Investors get better cash flow thanks to lower purchase prices and strong rental demand.‍
• Job growth tailwinds: Midwest metros are seeing renewed interest from manufacturers, tech, and healthcare companies expanding operations in affordable talent markets.

We’ve always believed the Midwest deserves more attention. These aren’t boom-and-bust cities, they’re places where families stay, where industries grow roots, and where investors can build portfolios with staying power.

3. Supply & Demand Are in Balance

Unlike the South, where speculative building and population shifts created an imbalance, many Midwest cities are still undersupplied when it comes to quality housing stock.

Cleveland, for example, has a homeownership rate below the national average, a growing class of renters-by-choice, and a lack of modern multifamily supply, all ingredients for a strong rental market.

Meanwhile, new development is often more cost-effective due to lower land and labor costs, further improving return profiles for builders and investors.

4. Institutional Capital Is Catching On

A recent shift among institutional investors is underway. Many are pulling back from Sun Belt metros that once dominated headlines and are instead reevaluating Midwest secondary markets.

Why?

Because when capital gets cautious, it moves toward cash flow, fundamentals, and risk-adjusted returns, all of which the Midwest offers.

We’re seeing more competitive deal flow in markets like Cleveland, Columbus, and Dayton, where real estate still pencils and long-term growth is being fueled by infrastructure, innovation, and smart policy.

The Midwest Isn’t Just “Safe,” It’s Strategic

For years, the Midwest was framed as slow or boring compared to high-growth coasts and southern metros. But in today’s shifting market, that stability is a strength.

For investors looking to build a resilient portfolio, grounded in fundamentals, supported by demographic trends, and insulated from boom-bust cycles, the Midwest is a region that deserves a long, hard look.

We’re not just betting on it.

We’re building in it.

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Sources:

• Prashant Gopal, “Homes Are Getting Harder to Sell in Florida and the US South,” Bloomberg, July 1, 2025. Link
• Redfin Data Center
• U.S. Census Bureau
• Federal Reserve Bank of St. Louis