While the U.S. housing market is expected to cool in 2020, certain markets will remain steadfast, fueled by strong local economies, job creation, and available inventory, especially at the entry-level price point. Topping next year’s housing markets list are Boise, Idaho, McAllen, Texas, and Tucson, Ariz., according to realtor.com®’s analysis of the 100 largest metros released today.While the U.S. housing market is expected to cool in 2020, certain markets will remain steadfast, fueled by strong local economies, job creation, and available inventory, especially at the entry-level price point. Topping next year’s housing markets list are Boise, Idaho, McAllen, Texas, and Tucson, Ariz., according to realtor.com®’s analysis of the 100 largest metros released today.
Based on realtor.com®’s analysis of projected home sales and price data, this year’s list highlights the trend of people moving from expensive coastal cities to more affordable areas inland. In fact, nine out of 10 of 2020’s hottest markets are not on the coast — a significant change from last year when four out of 10 markets were on or near the water. This trend is particularly noticeable in Boise, which jumped from the No. 8 position last year to the top spot for 2020. Boise is seeing an influx of out-of-state buyers looking to enjoy the city’s amenities at a lower price point compared with places such as California.
In the top 10 markets, home sales are expected to increase by 2.4 percent and prices by 3.1 percent on average year-over-year. This is in contrast to a 1.8 percent decrease in home sales and a 0.8 percent increase in sales prices nationwide, according the realtor.com® 2020 housing forecast.
Top 10 markets in 2020
- Boise, Idaho
- McAllen-Edinburg-Mission, Texas
- Tucson, Ariz.
- Chattanooga, Tenn.
- Columbia, S.C.
- Rochester, N.Y.
- Colorado Springs, Colo.
- Winston-Salem, N.C.
- Charleston-North Charleston, S.C.
- Memphis, Tenn.
“Many of the markets on this year’s list are late bloomers in the current housing cycle, meaning they still have plenty of inventory and prices are within reach — a rare combination in recent years,” said George Ratiu, senior economist, realtor.com®. “Additionally, a number of the top markets in 2020 are welcoming an influx of buyers from nearby large cities that have become crowded, expensive and lack sufficient inventory.”
Buyers have more choice
With inventory at historically low levels nationwide, home ownership has become challenging, especially for first-time buyers. In fact, this year’s list represents the nation’s only markets which retain sufficient inventory, especially at the entry level price point. The search for affordability has attracted a large number of buyers into these markets, with active listings decreasing 11 percent year-over-year. However, in many of the top 10 markets, constricted supply is a relatively new issue and the total stock of inventory remains plentiful and in a good position to absorb growth.
Many of the markets on this year’s list are smaller cities that are handling overflow from nearby larger cities that have become crowded and unaffordable. For example, Colorado Springs is becoming a respite from Denver’s pricey housing market and Memphis and Chattanooga are affordable options for people looking for Nashville alternatives.
Interestingly, the majority of top markets are home to a college or university. This is likely due to the fact that many schools are creating incubators to nurture entrepreneurs and start-ups, helping to fuel local job markets. Rochester, N.Y., for example, is home to two large universities and is benefiting from this trend.
Cities like Tucson, Ariz., Winston-Salem, N.C., Columbia, S.C. and Charleston, S.C. have become popular retirement destinations. Many baby boomers are looking to spend their golden years in a warmer climate and escape the high property tax rates that are common in the Northeast. Arizona, North Carolina and South Carolina do not tax Social Security retirement benefits, making these states attractive to older buyers.
“As a whole, millennials are driving the housing market, but what’s interesting in this year’s list is that not all of our cities fall into that category. In fact, only half of this year’s top 10 are millennial markets and the other half are being driven by retirees and mid-lifers leaving more expensive coastal cities,” added Ratiu.