Markets across the South are expected to experience explosive home value growth in 2020 as buyers search for a reprieve from exorbitant housing prices on the East and West Coasts, according to Zillow’s latest Home Price Expectations Survey released on Thursday.
More than 100 economists, investment strategists, and real estate experts assigned the nation’s 25 largest markets a net score, which is based on the share of panelists who believed a market would outperform the forecasted national home value growth (2.8 percent) weighed against the share of panelists who believed that market would underperform.
Austin (76) received the highest net score as 83 percent of panelists said they expected the city to experience home value growth higher than 2.8 percent in 2020. Atlanta (59), Charlotte (51), and Nashville (49) followed close behind with scores ranging from the high forties to the high fifties. Although the list was dominated by southern markets, Denver, Minneapolis and Portland managed to make their way to the top with scores as high as 33.
Seattle was the only market to receive a neutral score, as an equal share of panelists believed the northwestern tech hub would either over-perform or under-perform in 2020.
Skylar Olsen
“Having subjected buyers to a crucible of fierce competition for multiple years, many West Coast markets hit an affordability ceiling that set off declining home values in the most expensive of these,” said Zillow Director of Economic Research Skylar Olsen in a press release. “Indeed, this price correction — a clap back from having appreciated with too much exuberance in the recent past — pushes many previously hot markets to the bottom of our experts’ list.”
“At the top of the list are metros still providing relative affordability and thriving, amenity-rich communities that appeal to younger adults willing to make a move,” Olsen added. “These features, plus the ability to grow and add housing in the future, are attractive propositions for employers and employees alike.”
Meanwhile, San Francisco (-40), San Jose (-38) and Los Angeles (-35) received the worst scores. In addition to experiencing below-average home value growth, panelists told Zillow they expect values in those areas to “outright fall” by year’s end.
“Panelists, 42 total, who thought at least one major metro would see falling home values in 2020 generally agreed that California markets would make that list,” the report read. “A majority (57 percent) of these panelists expect home values to fall in San Francisco, and half said they expected the same in San Jose.”
“More than a third (38 percent) said they expected home values in L.A. to fall in 2020, followed by 29 percent in both San Diego and Riverside, and 24 percent in Sacramento.”
The panelists’ assessments echo a number of economic forecasts Inman published in December, which revealed secondary markets are expected to lead the housing market for at least the next five years.
“With high-priced, coastal cities pricing out many young buyers, mid-sized markets in the Midwest and Southeast have attracted a rising share of both Millennials and Baby Boomers,” realtor.com Chief Economist George Ratiu told Inman while highlighting Charlotte, Charleston, and Raleigh. “With the influx of homebuyers, many of these markets are experiencing the effects of rising demand and insufficient supply, with evaporating inventories and higher prices.”
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