The Nation’s Healthiest and Unhealthiest Housing Markets
Nobody can dispute that the housing market has come back, despite the doomsday case laid out by some economists after it peaked in 2006, then crashed in the Great Recession of 2008. According to the Economist, on average housing prices have recovered all their losses since the 2008 drop, although, adjusted for inflation, prices are still 20% below their peak. (For more, see Is the U.S. Housing Market Really Coming Back?)
Despite the impressive gains to the national average, the recovery has been uneven, with average-home-price growth up double digits in some areas and down nearly 8% in others. Online real estate marketplace Ten-X recently released a study that looked at the hottest single-family markets as of the spring of 2017 in the nation’s 50 largest housing markets. The company analyzed sales and pricing activity along with affordability, permit activity and economic and demographic growth. Rankings are forward looking, meaning that the list also considers economic forecasts, population trends and future growth prospects.
The Healthiest Housing Markets
- Tampa, Fla. – Taking the top spot is Tampa. Metro employment is up an impressive 3.1% year over year and has been consistently growing in the 2% to 4% range for five years, and jobs have grown at a similar pace for the past five years. Existing home prices rose 13.1%, and the region’s population growth should allow Tampa to continue its upward climb.
- Dallas – When oil prices took a tumble, so did many markets in Texas, but Dallas has remained resilient. Employment growth has been in the 4% range, and home sales are up 2.9% as they continue their rise since peak levels before the recession. Home prices are up 10.6% and have printed gains for 20 straight quarters. Single-family homes are very affordable relative to income levels, and they’re a better value than local apartment rentals.
- Columbus, Ohio – The state of Ohio has its economic challenges, but Columbus has remained steadfast. Employment growth is up 2%, and home sales have increased by 6.6% – within 10% of peak levels seen prior to the recession. Home prices rose 9.6%, the strongest pace this cycle. Ten-X believes that Columbus’ solid economic forecast will likely fuel further housing growth.
- Las Vegas – You might only see Las Vegas as a vacation city, but recent data have shown that not to be true. In a market hit hard by the recession, home prices rose 9.7%, a 90% rise since bottoming out five years ago. But there’s still room to grow, as prices remain 30% below peak levels.
- Jacksonville – A 3% increase in job growth has helped to make Jacksonville the fifth-hottest housing market despite its slowing expansion. Existing home sales grew 7.3% year over year, and accelerating population growth will set it up for additional impressive housing-market gains.
The Unhealthiest Markets
The five unhealthiest housing markets on the list are Los Angeles; San Francisco; Long Island, N.Y.; Central New Jersey and Northern New Jersey.
According to Ten-X’s chief marketing officer and former executive vice president, Rick Sharga, Los Angeles and San Francisco are actually healthy markets, but because of limited inventory and skyrocketing prices people are being priced out of them. In the cases of Long Island and New Jersey, Sharga says that a backlog of foreclosure properties that should have been on the market much earlier are serving to keep home prices low. Because it takes about three years for homes to go through the foreclosure process in that area, these homes are depressing prices in otherwise healthy communities. Additionally, low population and job growth in the region are keeping wages down. Consequently, affording the homes is a challenge for local residents.
Move your mouse over the map to see how the other housing markets ranked. The larger markers are the cities that ranked higher.
The Bottom Line
The housing recovery is impressive nationally, but not all regions are seeing the same growth. Before deciding on a city to call home, research the local economy. (For more, see 4 Key Factors That Drive the Real Estate Market.)