When it comes to balancing risk and reward in real estate, cities in
the Southern half of the country look to be in the sweet spot now, as
well as one surprising Northeastern metropolis, where lack of land to
build turns out to be a plus. Whether your looking to put down roots
with a family home or to rent out your purchase for yield, these cities
offer two things anyone making a home investment should be after:
affordability and growth.
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.
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. (
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
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
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.
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.”
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
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
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%.
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.
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."
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%.
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.
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.
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.
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.
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%.
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
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