December 12, 2019 – Two different companies, The National Association of Realtors® (NAR), and Realtor.com, have each identified markets expected to outperform in the coming years. The lists are quite different, with Realtor.com’s concentrating more on smaller markets.
Both sources believe that affordability and strong local economies are key to markets with strong prospects for the future. Note that very few of these cities are on the coasts, although the overwhelming majority are in warm weather climes.
In alphabetical order, here are the top 10 the NAR expects to outperform over the next three to five years.:
- Charleston, South Carolina
- Charlotte, North Carolina
- Colorado Springs, Colorado
- Columbus, Ohio
- Dallas-Fort Worth, Texas
- Fort Collins, Colorado
- Las Vegas, Nevada
- Ogden, Utah
- Raleigh–Durham–Chapel Hill, North Carolina
- Tampa–St. Petersburg, Florida
However, don’t stop with just the NAR report. Realtor.com jumped into the topic with its own list. Here are the “hottest” real estate markets they predict for 2020, along with median home prices. Note: many of these are smaller markets. The only overlap we see in the top 10 are Charleston and Colorado Springs.
|7||Colorado Springs, Colo.||$312,000|
|9||Charleston-North Charleston, S.C.||$270,000|
The NAR offered additional explanation on its choices for hottest markets:
“Some markets are clearly positioned for exceptional longer term performance due to their relative housing affordability combined with solid local economic expansion,” said NAR’s Chief Economist Lawrence Yun. “Drawing new residents from other states will also further stimulate housing demand in these markets, but this will create upward price pressures as well, especially if demand is not met by increasing supply.”
Affordability, Employment and other factors
NAR identified the top 10 metro areas based on a myriad of factors, including domestic migration, housing affordability for new residents, consistent job growth relative to the national average, population age structure, attractiveness for retirees and home price appreciation, among other variables.
Strong job growth is one factor driving up prices in these markets, with payroll employment rising about 2.5% annually in the last three years, higher than the national rate of 1.6%.
Movers flock to these markets at higher rates than the average of the 100 largest U.S. metro areas. In Colorado Springs, recent movers accounted for 21% of the total population, followed by Fort Collins at 17% and Las Vegas at 16%. These areas attract various age groups. For example, 11% of the people who moved to Tampa were 65 years and older, while 54% of recent movers in Durham were between the ages of 18 and 34.
In most of these metro areas, about half of recent movers who are renting can afford to buy a home in those respective markets when compared to the nation’s 100 largest metro areas. Homeownership rates in these markets are expected to increase due to the relative affordability.
Comments? What markets do you think are going to take off in the next few years? How is the market in the area where you live?