Zillow Survey Predicts Austin will be the Nation’s Hottest Housing Market, Leading a Sunbelt Surge
More affordable metros are replacing expensive coastal areas as top drivers of home value growth
— A panel of economists and real estate experts expect Austin to outperform the national market by the largest margin, followed by Phoenix, Nashville, Tampa and Denver
— Expensive coastal markets New York, San Francisco and Los Angeles are most likely to underperform, though Zillow expects growth in every market
— Key tailwinds include an improved economic outlook underpinned by progress on coronavirus vaccines, while affordability and available supply are potential drags
SEATTLE, Jan. 19, 2021 /PRNewswire/ — Austin will be America’s hottest housing market in 2021, leading a list of mostly Sun Belt cities expected to continue heating up faster than the nation’s large coastal markets, according to a new Zillow® survey of experts.
The booming Texas destination heads a lineup of sunny and relatively affordable metro areas — Phoenix, Nashville, Tampa and Denver — that are most likely to outperform the nation in home value growth, according to a panel of economists and real estate experts recently surveyed by Zillow.
The Zillow Home Price Expectations Survey, sponsored by Zillow and conducted quarterly by Pulsenomics LLC, asks a large panel of economists, investment strategists and real estate experts for their predictions about the U.S. housing market. The Q4 survey also asked about their expectations for 2021 home value growth in 20 large markets compared to the nation.
An overwhelming 84% of those surveyed said Austin values would out-perform the national average, compared to just 9% who believe it would fare worse. Phoenix came in second with 69%, followed by Nashville (67%), Tampa (60%), and Denver (56%). Page views on Zillow for-sale listings in Austin by out-of-town searchers were up 87% in November compared to 2019.
The top-five metros are all affordable options compared to expensive coastal areas that have led home appreciation ranks in recent years, providing relative value for Millennials looking to take advantage of low mortgage rates to buy their first home. The top five are also, for the most part, sunny locales. Four of the five counties holding the largest cities in these MSAs all rank in the top-third of counties in the contiguous U.S. for average daily sunlight, according to NASA data analysed in The Washington Post. Davidson County, home to Nashville, ranked just below the midline.
“The pandemic has not upended the housing market so much as accelerated trends we saw coming into 2020,” said Zillow senior economist Jeff Tucker. “These Sun Belt destinations are migration magnets thanks to relatively affordable, family-sized homes, booming economies and sunny weather. Record-low mortgage rates and the increased demand for living space, coupled with a surge of Millennials buying their first homes, will keep the pressure on home prices there for the foreseeable future.”
An improved economic outlook thanks to COVID-19 vaccine roll-outs and better treatments was pegged as the most likely tailwind for the housing market in 2021, followed by sustained strength in first-time home buying among Millennials. It proved a powerful demand driver in 2020 and is expected to persist for years to come.Link to Zillow Article
Hat tip SM:
Like many members of the recent California exodus, Alder chose to move to Austin because of the perception that the capitol city offers a similar lifestyle. His family left a 2,000 square-foot house in San Diego for a Bee Cave home with a pool and twice the square footage.
He noticed plenty of differences between the two locales, from weather to culture, but first emphasized one similarity.
“The thing that California and Austin definitely have in common is that they’re both very expensive,” Alder wrote. “Austin is not cheap. Let the words sink in. Austin is not cheap, it’s actually quite expensive.”
Texas might not have any state income taxes, but it has plenty of other costs.
Alder pointed to the high price of energy, water, and services like pool maintenance and landscaping. He also wrote fellow transplants should budget for summer getaways, because “most anyone who can leaves Austin for a month or two” to escape the heat.
The “oppressive” heat — and the wintry cold, humidity and allergens — were major sticking points for the new Texan. So was the perceived lack of public space.
Some of Alder’s concerns, like the potent cedar allergies, made sense. Others — “the car washes were lame” — were rather baffling. The sales executive finally had enough and moved back to the coast. He now works in the Bay Area in the semiconductor industry.
The moral of the story, Alder wrote, was that it’d take a lot of money to buy a “California-like” lifestyle in Austin. “It was an expensive mistake, but my family and I now see California in a completely new light,” he added.
I always wonder how the median income in the cities listed rank when compared to median home prices. My guess is it’s relative but maybe not for Austin, Phoenix and Nashville.
Median Income, 2017:
San Diego: $76,000
Median Home Price, 2017:
San Diego: $600,000
Median Home Price, Today:
Austin: $475,000 (+43%)
San Diego: $692,000 (+15%)