Whether looking for a place to live or a property to rent out for yield, every home buyer wants to make a smart investment. To find out where you can do just that in 2017 Forbes teamed up with Local Market Monitor, a North Carolina-based company that tracks more than 300 housing markets. Below you'll find 20 markets where population, jobs and home prices are growing. Florida and Texas dominate, but solid markets can be found across the United States. For every city on the list, Local Market Monitor expects home prices to grow by at least 17% by 2020.
Methodology and trends.
Dallas dominates: The home of Exxon Mobil and the Dallas Cowboys claims the no. 1 ranking this year. Dallas has an average home price of $233,000. That’s up 3.9% from a year ago and underpriced by 3% compared to the city’s historic average. Local Market Monitor forecasts prices will increase 31% by 2020 thanks in part to 3.9% job growth in the past year and 6.2% population growth in the last three.
Florida holds on: Four cities in the Sunshine State made the list, the most of any state, and all are in the top 10. There’s Jacksonville at no. 2, Orlando at no. 3, West Palm Beach at no. 5 and Tampa at no. 7. Winzer says that Florida’s continued strength is the biggest surprise of the list. ( Last year seven Florida cities made the cut.) Florida was the poster child for financial crisis devastation. As recently as 2015 seven markets in the state were undervalued by more than 20%. But builder constraint and job growth has boosted the value of existing homes.
Texas on top: The Lone Star State not only holds the top spot on our 2017 list but the second most spots overall, with Forth Worth at no. 9 and San Antonio at 20. The recession and housing crisis did not hit Texas quite as hard as the rest of the country, meaning it came back quicker and has been adding jobs longer and faster than the rest of the country. Opportunity and affordable housing led more people to move from other states to Texas in 2015 than any other state besides Florida. Austin, which made our 2016 ranking, would easily make a top 30 list, but is a bit overpriced compared to a year ago.
Boston bucks coastal crush: Perennially absent from this list are the major California markets San Francisco and Los Angeles, as well as East Coast megacities New York and Washington D.C. Scarcity has made these places too expensive to be top investments.
20 markets where population, jobs and home prices are growing
Dallas takes the top spot after ranking no. 6 in 2016. Prices here are expected to grow the most of any list city. Informing that forecast is 6.2% three-year population growth, 3.9% job gains last year and 9% annual home price gains. Homes in Dallas are also undervalued compared historic averages and local income.
The first of three Florida cities on the list, Jacksonville claims 9% annual home price growth, 4.1% annual job growth and 5.1% population growth from 2012 to 2015 (the most recent data available for all cities). Homes in Jacksonville are undervalued by 8% compared to the historic ration of price and local income.
Recommended by Forbes
Orlando boasts 7.2% three-year population growth and 4.4% annual job growth, both list highs. “A growing economy makes up for a lot of other stuff," says Local Market Monitor CEO Ingo Winzer. "With a falling economy it doesn’t matter if things are good right now, they are not going to be good in a few years.”
Prices in Seattle rose 12% last year the most of any list city. The average home price is second highest. Says Winzer: "In the very top markets, both population and jobs are growing at high rates and builders aren't able to keep up, which is why home prices have increased rapidly and rental demand will be strong."
West Palm Beach enjoys 11% annual home price growth, 1.9% annual job growth and 4.7% three-year population growth. Despite the major rise in prices, homes here are not yet over valued.
Salt Lake City West has 8% annual home price growth, 3.3% annual job growth and 4.1% three-year population growth. While not under valued, prices are yet to get ahead of themselves.
Home prices grew 9% in Tampa last year. Job growth was 2.6%. The population in the fourth and final Florida city on the list grew 4.5% from 2012 to 2015.
Nashville enjoys 9% annual home price growth and 2.7% annual job growth. With 6% three-year population growth it was among the fastest growing cities on the list. As demand grows, homes here are under priced by 7%.
Home prices gained 9% in Forth Worth last year. Job growth was 2.3%. The population in the second of three Texas markets to make the list grew 5.2% from 2012 to 2015.
Homes in Grand Rapids (no. 1 in 2016) are by far the lowest priced of the list and significantly undervalued compared to history and local income. "Markets like Grand Rapids, Columbus and Atlanta still hold bargains," says Winzer. "All these markets have upside price potential without the risk of a local bubble."
Just two California markets made this year's list. "We don't see Los Angeles or San Francisco in this list because they already are over-priced," notes Winzer. Sacramento, the state capital, rejoins the top 20 this year thanks in part to perfect pricing for the city's average income.
The first of two consecutive North Carolina markets to make the list, Charlotte has 8% annual home price growth, 2.1% annual job growth and 5.7% three-year population growth. Prices here are undervalued by 11%.
Raleigh claims 7% annual home price growth, 2.2% annual job growth and 7.1% three-year population growth--the second highest on the list. Prices here are undervalued by 15%.
San Diego is the highest priced place on our list after gaining 6% last year. Unlike nearby Los Angeles, the city is not yet overvalued for the local income. The population here grew 3.6% between 2012 and 2015 and last year the city had 2.2% annual job growth.
Though still under priced by 14%, Las Vegas housing has come a long way from when it was depressed by as much as 40%. The city was crushed by the financial crisis, with few takers for either casinos or the large supply of investment properties. But people are now coming back with 5.8% population and 1.9% job growth.
The only North Eastern city to make it, Boston bucks trends thanks to its healthcare industry. At 2.7% population growth here is the lowest of the list, but with no room to build it doesn't take much to boost prices. Last year Boston had 1.9% job growth. Home prices have gained 6% but are still slightly under valued.
Columbus ties with Grand Rapids for most under valued city, at 25% below the historic ratio of price to income in the city. Prices here are among the lowest on the list and have grown 6% year-over-year. The population in Columbus grew 3.9% from 2012 to 2015. Last year job growth was 1.6%, the lowest on the list.
With 5.6 million people, Atlanta has the largest population of any city on the list. The population here grew 4.7% between 2012 and 2015. Last year the city had 2.7% job growth. Home prices gained 8% last year but are still undervalued by 17%.
Home prices gained 7% in Phoenix last year. Job growth was 1.8%. The population in only Arizona market on the list grew 5.7% from 2012 to 2015.
The population of San Antonio grew 6.5% from 2012 to 2015. Lat year home prices gained 7% and jobs growth was 1.7%. Homes here are 7% under valued.