What do these markets have in common?
Interestingly, this isn’t as diverse a group of markets as it may appear. There are some common trends among the projected 10 hottest markets of 2020:
- Affordability: The average 2019 selling price in these 10 markets was $213,000, about 38% below the national average. Seven out of the 10 markets on the list have median asking prices below the U.S. average.
- Momentum: Not only are these markets projected to be strong in 2020, but they’re coming off a very strong 2019. In these markets, the median sale price increased by 6.5% from 2019 levels, as compared with the national average of a 3.8% gain.
- Job growth: The average market on Realtor.com’s top 10 list experienced 2.1% job growth in 2019, whereas the average U.S. job market was completely flat year over year. Job growth leads to household formations and increased demand for real estate, which can boost sales volume and lead to higher selling prices as demand exceeds the home supply.
- Smaller markets: To be sure, every market on this list is one of the 100 largest housing markets in the United States. However, they tend to be on the smaller end of the list. The average number of households in the top 10 markets is 330,000, well below half of the average of 828,000 among the 10 largest markets. Many of the largest U.S. markets have experienced years of above-average price gains and could be overheated, while the midsized housing markets largely have not experienced similar trends.
Nobody has a crystal ball
As a final thought, keep in mind that these are only predictions. Nobody has a crystal ball that can predict housing trends with 100% accuracy. For example, Realtor.com’s 2019 predictions called for home price growth of 2.2%, and the actual figure turned out to be significantly better at 3.8%. Their projections are typically accurate in terms of being in the ballpark, but it’s important to take the numbers with a big grain of salt.
Having said that, these markets are poised to have excellent years in 2020, and most have the catalysts to back this up. Just to name a few examples:
- Boise has one of the highest job growth rates in the nation, especially in the tech sector, which is helping to drive home prices higher.
- Tucson has extremely low inventory, great weather, and a strengthening job market.
- Columbia (in full disclosure, this is where I live) has one of the most affordable urban housing markets in the country and limited inventory in the sub-$200k price range where many buyers are looking.
In short, while the exact performance of these markets in 2020 remains to be seen, these areas are certainly in a strong position to have a great year.