let’s talk : 2018 HOTTEST markets

Real Estate

April 11, 2018

let’s talk : 2018 HOTTEST markets

Good morning!
HEADS UP, today is a long one folks but stay with me I have some new updates that should hopefully benefit YOU and YOUR BUSINESS $$$.

First things first, I want to talk to you about this week’s topic of convo; it’s the current housing market, and how HOT it is. On average, ~53% of homes across the U.S. are worth the same or MORE than they were at the last housing market peak (2007). Last week I told you what I thought was HOT (Binghamton) but this week I thought I would tell you what the experts are saying is HOT. I know I have totally overused the word HOT here but now you get my point and I will stop.

With the warm Spring season and rising interest rates on the horizon, buyers are expected to come out and hit the buying scene ASAP in order to quickly swoop up the home of their dreams. So, four months into 2018, WHERE are we seeing these buyers? Here is what the professionals are saying…

So, as we do, let’s talk Real Estate, let’s talk the HOTTEST MARKETS FOR 2018…

I consolidated data from Zillow, Realtor.com, Forbes, Trulia, and Barron’s to come up with the below list (in no particular order).

DALLAS, TX

Median Home Price : $394,000 (Zillow)
Median Household Income: $41,755 (Trulia)
Median Monthly Rent: $1,800 (Trulia)

I have seriously seen Dallas, TX on a list of GOOD looking markets for a while now. Last summer, I actually interviewed for a real estate technology group where I was presented a case study on how to handle the growing Dallas market. While some may argue that Dallas is OLD news, it is still on EVERYONE’s top market list this year.

Why? Well, Dallas is the 4^th most populated metropolitan city in the U.S. and with large employers like AT&T, Southwest, and Texas Instruments – there are plenty of jobs to be had. Over the past two years, Forbes alone has ranked it on 3 different “TOP” lists (#1 on Best City to Buy Housing, #3 in Fastest Growing Cities in America, #5 on Best Cities for Jobs). NOTE TO INVESTORS THOUGH; people are well aware of the booming Dallas market and there is little inventory left for investors right now, so if you are looking to invest in Dallas it’s time to get creative.

DENVER, CO

Median Home Price : $385,000 (Trulia)
Median Household Income: $48,594 (Trulia)
Median Monthly Rent: $2,200 (Trulia)

Similar to most of the U.S., Denver is another story of under-supply. Demand continues to outstrip stock in this area, and researchers say new homes are not being built fast enough. While housing prices are not expected to increase as much in 2018 as they did in 2017, there is still a huge lack of inventory. Statistically, a balanced market has 5-6 months supply of homes; as recent as December 2017, Denver had just under one month’s supply…

NASHVILLE, TN

Median Home Price : $289,000 (Trulia)
Median Household Income: $45,038 (Trulia)
Median Monthly Rent: $1,750 (Trulia)

Realtor.com / Barron’s (same parent company) expect to see some of the largest home price gains in the Southeast led by Nashville, TN (~8% this year) due to abundant land and strong economic growth. In 2017 they were ranked as the 3^rd highest home appreciation city in the nation. Sellers in the area saw the highest profits on their homes since 2000.

What is driving this increase in value? The migration of “outsiders”. Nashville is becoming increasingly popular for working professionals who are moving from high priced metropolitan hubs and are willing to pay a “premium” for the right home in Nashville. Why are they willing to pay this premium? Well, more often than not, they still view the “premium” deals as a bargain compared to where they were coming from. Honestly, I TOTALLY get this theory. I, myself, being in New York, am semi-excited to eventually move ANYWHERE else where my monthly rent or mortgage payment won’t consume my entire life budget.

RALEIGH, NC

Median Home Price : $250,000 (Trulia)
Median Household Income: $59,679 (Trulia)
Median Monthly Rent: $1,395 (Trulia)

Let’s talk about how Raleigh landed on the list this year; rising home values, healthy rental markets, steady income growth, low unemployment rates, and a plethora of job opportunities are making Raleigh THE place to lay down your roots AND also invest. Raleigh’s income grew by 9% in 2017 largely driven by an abundance of new tech and finance jobs. Zillow actually ranked Raleigh #2 on the hottest list, just behind San Jose, CA…

SAN JOSE, CA

Median Home Price : $860,500 (Trulia)
Median Household Income: $83,113 (Trulia)
Median Monthly Rent: $3,495 (Trulia)

Ranked as THE hottest market for 2018 by both Zillow and Forbes, as high paying tech jobs continue to stimulate the housing price increase in the Silicon Valley. Furthermore, San Jose also has the highest rate of job openings per person when compared to all other major U.S. metropolitan areas. San Jose has become so popular that houses listed for sale are seeing 15-20 offers each. In 2017 alone, housing prices in San Jose increased 31.9% (according to Redfin).

But the tech industry is NOT brand new, so why is San Jose SO popular all of a sudden? Well, even the super rich of the tech world are starting to get priced out of San Francisco and are beginning to venture into the “nearby” town of San Jose. You may be better able to understand this statement once you catch a glimpse of the San Fran stats below…

SAN FRANCISCO, CA

Median Home Price : $1,250,000 (Trulia)
Median Household Income: $78,002 (Trulia)
Median Monthly Rent: $4,400 (Trulia)

Can we all first take a minute to re-read the MEDIAN home price in San Fran? Are you kidding me? How can prices get any higher? Safe to say I do not think I am ever going to be able to purchase a property there. Realtor.com / Barron’s are forecasting further increases in home prices for 2018; all led by too many jobs, not enough real estate. The expansion of Dropbox, Google, and Facebook are predicted to help continue to fuel this strong demand for real estate in the city. The question is, how far are home buyers willing to go? We are already seeing people leave San Fran for “cheaper” alternatives. I think the question here is not, WILL this ever truly affect the San Francisco market, but WHEN will this affect the San Francisco market?

SEATTLE,WA

Median Home Price : $667,500 (Trulia)
Median Household Income: $67,414 (Trulia)
Median Monthly Rent: $2,895 (Trulia)

Forbes is calling Seattle the next New York due to the influx of skyscraper construction. Population growth is causing real estate and land to become increasingly scarce in the area and subsequently driving the height of buildings and prices UP. Home to Starbucks, Nordstrom, Amazon and Microsoft (a few of my favorite things), there is a lively workforce and more and more people are flocking to the area every minute.

What is the vibe here? Word on the street is that it is like a slightly less expensive San Francisco due to its bustling economy and thriving arts scene.

AUSTIN, TX

Median Home Price : $579,552 (Trulia)
Median Household Income: $56,006 (Trulia)
Median Monthly Rent: $1,950 (Trulia)

According to one of Texas A&M University’s chief economist, the Austin housing market is expected to have another record breaking year in 2018. On average the city is seeing an increase of ~150 people per day. The combination of the influx of people mixed with just~ 2 months of housing supply is driving up prices. This could actually become a curse in that income is not increasing at the same rate as housing prices, forcing some to move out to the suburbs. Outside of residential living, investors have been reporting solid returns largely driven by commercial real estate investment.

CHARLOTTE, NC

Median Home Price : $230,000 (Trulia)
Median Household Income: $54,250 (Trulia)
Median Monthly Rent: $1,375 (Trulia)

Charlotte ranked #4 & #7 on 2018’s Hottest Market list, by Zillow and Realtor.com respectively. Housing prices in the area are expected to increase faster than the national average this year due to limited inventory. Over the past couple of years Charlotte’s market popularity has been largely fueled by the increased financial sector presence in the city.

PORTLAND, OR

Median Home Price : $412,900 (Trulia)
Median Household Income: $53,729 (Trulia)
Median Monthly Rent: $2,150 (Trulia)

High population increases in 2016-2017 crippled the area in terms of housing supply. Experts expect that this high growth number will more so level off in 2018, however the imbalance in people vs available homes is still there so we can expect housing prices to continute to increase. To only further back-up this “increase in housing prices” case, Portland is significantly less expensive than its metropolitan “neighbors” in San Fran and Seattle, giving the Portland real estate market “room” to grow.

SIDE NOTE…

While New York did NOT make this consolidated list, Forbes did give a shout out to the expected continued prosperity of the Greater New York City area (which we talked about a few weeks ago)!

NOW, I PROMISED SOMETHING WORTH YOUR WHILE, SO WHAT IS IT?

WELL, I added a few new features to the blog…

Quick Metrics : This allows you to go in and quickly grab some of the calculations we use to analyze deals.

Tell us about YOUR business: Essentially, SHOW US WHAT YOU GOT. Here you can share with the greater “let’s talk Real Estate community” about what you are doing, what you need, questions you may have, potential partnerships, etc. As Aerosmith once said, COME TOGETHERRRR, RRRRIGHT NOW. Seriously though, I do hope you all use this as free marketing and work with each other, because I truly do believe in the power of a good network.

Anyways, how do YOU all feel about these HOT markets? Or, the new site capabilities?! What other features do you think we should add to http://www.lets-talk-re.com?!

Feel free to comment on the blog post HERE and let us know what YOU think!

Happy Wednesday!

–Erin

Data Sources for today’s content:

https://www.realtor.com/news/trends/20-hottest-markets-real-estate-u-s-february-2018/

https://www.zillow.com/research/hottest-housing-markets-2018-17852/

https://www.hgtv.com/design/real-estate/10-hottest-us-housing-markets-for-2018-pictures

https://www.barrons.com/articles/2018s-hottest-housing-markets-1520016414

https://www.realwealthnetwork.com/markets/dallas-texas/

https://www.denverpost.com/2017/12/31/metro-denver-housing-market-forecast-2018/

https://www.sammamishmortgage.com/denver-market-predictions-short-supply/

https://www.forbes.com/sites/forbesrealestatecouncil/2018/04/03/15-booming-real-estate-markets-that-are-trending-in-2018/#5281ce0626f6