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Top 10 Hottest Markets

These look like the towns to which people from New York and California are moving. Excerpts:

The boomer tide in the for-sale housing market is expected to continue to rise for at least the next 8 years; younger millennials will be hitting first-time home buying age at about the same time, meaning the 2020’s will be a period of sustained underlying demand in the housing market.

Year by year, these effects will be felt differently across markets.

In 2022, the market with the most demographic lift in the for-sale market is Austin, with a trend suggesting the formation of 3.4% more owning households (assuming there are homes available for them to buy). Orlando follows at 2.8%, and then Tampa at 2.7%. Of the largest 50 markets, 29 have natural owner household growth exceeding 1% in one year, the rule-of-thumb rate at which the housing stock increases nationally. The markets with the least demographic pressure for growth are Pittsburgh, Hartford and Buffalo.

Risks

There are two large known risk factors for housing markets in 2022. First, mortgage interest rates are expected to rise in 2022, making home loans more expensive for aspiring buyers. At the margin, this would restrict the inventory accessible in the most expensive markets, potentially driving up competition for the lowest-priced homes in those markets or removing them from consideration altogether.

Historically, home value appreciation in the following markets has strong negative correlation with interest rates — so if interest rates go up, these markets are likely to slow the most: San Diego, New Orleans, Washington DC, Los Angeles, San Jose and San Francisco.

Second, forecasts on the performance of stocks are incredibly wide, with analysts’ 2022 year-end targets ranging from -7% to +13%, slower growth in any case than what we’ve seen in the last 2 years if not declines. A slower stock market would mean buyers are bringing relatively less to the table for a down payment in 2022.

This would most affect markets where there are a lot of first time buyers or where more buyers are entering from lower cost areas, bringing less equity from their previous home. (Or if housing is treated as an asset it could mean a substitution to housing in the next few months. What follows addresses only the downside risk.)

In the following markets, growth has strong positive correlation with stock market returns — so if the stock market falters next year, we’d expect home value growth in these places to slow disproportionately: Phoenix, Las Vegas, Cincinnati, Hartford, St. Louis, Miami, Cleveland, Los Angeles and San Jose.

https://www.zillow.com/research/zillow-2022-hottest-markets-tampa-30413/

Northern California Coastal

In hopes of encouraging more readers to move somewhere (anywhere!), I took a spin around the north-coastal region of California via Zillow. I don’t know anything else about the area other than it is remote – readers who know more can feel free to comment!

1,732sf for $395,000:

https://www.zillow.com/homedetails/560-Reddy-Ave-Crescent-City-CA-95531/82854913_zpid/

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$399,900 for 1.47-acre oceanfront lot:

https://www.zillow.com/homedetails/18-Elias-Way-Smith-River-CA-95567/2067565430_zpid/

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1,832sf for $429,000:

https://www.zillow.com/homedetails/270-Clearlake-Ave-Lakeport-CA-95453/19085522_zpid/

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1,500sf for $469,900:

https://www.zillow.com/homedetails/3121-Bonanza-St-McKinleyville-CA-95519/18844002_zpid/

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1,830sf on an acre that backs to golf for $574,000:

https://www.zillow.com/homedetails/1755-Murray-Rd-McKinleyville-CA-95519/18843849_zpid/

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3,162sf for $749,000:

https://www.zillow.com/homedetails/948-Main-St-Ferndale-CA-95536/18822513_zpid/

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2,568sf for $963,000:

https://www.zillow.com/homedetails/15300-Us-Highway-101-N-Smith-River-CA-95567/2073113069_zpid/

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Hidden Gems

We’ll be in Tucson next month, and I’ll be doing my own investigation!

In 2021, single-family existing-home prices rose at the fastest pace in five decades at an average year-over-year pace of 18%, driven by strong job growth, historically low mortgage rates, a post-pandemic recovery in household formation, and inadequate housing construction and pandemic-induced supply bottlenecks. At the metro area level, the differences in price appreciation were heavily driven by job growth and by businesses and people moving into the area, especially among workers with the ability to work fully remotely.

Are there markets where home prices are still undervalued relative to the market fundamentals’ underlying home prices? In its latest report, 2022 Housing Market Hidden Gems, the National Association of REALTORS® identified the top 10 markets with strong underlying housing market fundamentals but where home prices are still undervalued and relatively affordable. As such, these hidden gem markets are expected to experience stronger price appreciation in 2022.

In alphabetical order, the hidden gem markets are as follows:

  • Dallas-Fort Worth, Texas
  • Daphne-Fairhope-Farley, Alabama
  • Fayetteville-Springdale-Rogers, Arkansas-Missouri
  • Huntsville, Alabama
  • Knoxville, Tennessee
  • Palm Bay-Melbourne-Titusville, Florida
  • Pensacola-Ferry Pass-Brent, Florida
  • San Antonio-New Braunfels, Texas
  • Spartanburg, South Carolina
  • Tucson, Arizona

Read more here:

https://www.nar.realtor/blogs/economists-outlook/top-10-hidden-gems-of-the-housing-market-in-2022

CalExodus

In San Diego County, the excessive frenzy conditions have been driven by newcomers who don’t have a house here yet, and who figure that they just have to pay what it takes to get one.

It is those buyers that out-bid the locals. As those numbers dwindle, the frenzy will subside: 

News reports, anecdotes, and preliminary research have speculated about whether there has been an exodus from California during the COVID-19 pandemic. The implications of population changes, such as federal representation and federal funding allocations, are significant.

This policy brief uses the University of California Consumer Credit Panel (UC-CCP), a dataset containing residential locations for all Californians with credit history, to track domestic residential moves into and out of California at a quarterly frequency through the end of September 2021. This brief updates our spring 2021 analysis that used data through December 2020.

https://www.capolicylab.org/pandemic-patterns-california-is-seeing-fewer-entrances-and-more-exits/

Top 10 Smaller Towns

Real estate has been challenging for many buyers this year, with home prices up sharply and inventory at record low levels. Some buyers may get a break in 2022, but it’s not likely to be in some of the nation’s smaller cities that have seen strong housing demand due to remote work during the pandemic.

The cities that are likely to see the strongest price increases and home sales are described as second-tier cities that offer better affordability and more space compared with the nation’s largest cities, according to a new forecast from Realtor.com. It based its forecasts on recent home sales as well as economic trends, such as unemployment and household growth.

Boise, Idaho, is again likely to be near the forefront in 2022, Realtor.com predicted. That comes after local property prices surged more than 30% in the third quarter, and Boise was named the least affordable housing market in the U.S. — with the city’s median home price jumping to almost $535,000, or 10 times the city’s median income.

Boise is attracting people who want to relocate from expensive tech hubs like San Francisco, people for whom those prices may seem like a deal compared with pricing in bigger cities. And that trend is likely to continue in 2022, said Realtor.com chief economist Danielle Hale.

“2021 was an ultracompetitive year for the real estate market, especially for smaller secondary tech markets. They benefited from knowledge workers being freed up from going into the office every day,” Hale noted. Next year will be “in many ways a continuation of what we saw this year.”

She added, “People are embracing the flexibility of the workplace and moving into areas that are more affordable.”

Most of the top 10 markets for 2022 have a “small-town kind of quality of life, yet they still have thriving local economies,” Hale noted.

Average home prices in the top 10 real estate markets are expected to jump 7.4% next year, or more than twice the national pace of 2.9%, Realtor.com said. Buyers may get a break next year with more inventory entering the market, relieving some of the low-stock issues that hampered home purchasers in 2021, Hale noted.

Many big cities like New York and Los Angeles are forecast to see price appreciations but may not match some of the smaller cities, according to the forecast. Prices in the New York metropolitan region, for example, are predicted to rise 2.3% in 2022, while home prices in the Los Angeles are likely to rise 4.8%, Realtor.com said.

Below are the top 10 markets for 2022, based on estimates from Realtor.com. Forecasts include the change in number of homes sold as well as prices for 2022 versus 2021.

1. Salt Lake City, Utah

  • Predicted sales change: 15.2%
  • Predicted price change: 8.5%
  • 2021 median home price: $564,062

2. Boise City, Idaho

  • Sales change: 12.9%
  • Price change: 7.9%
  • 2021 median home price: $503,959

3. Spokane-Spokane Valley, Washington

  • Sales change: 12.8%
  • Price change: 7.7%
  • 2021 median home price: $419,803

4. Indianapolis-Carmel-Anderson, Indiana

  • Sales change: 14.8%
  • Price change: 5.5%
  • 2021 median home price: $272,401

5. Columbus, Ohio

  • Sales change: 13.7%
  • Price change: 6.3%
  • 2021 median home price: $298,523

6. Providence-Warwick, Rhode Island-Massachusetts

  • Sales change: 8.1%
  • Price change: 9.5%
  • 2021 median home price: $419,813

7. Greenville-Anderson-Mauldin, South Carolina

  • Sales change: 11.4%
  • Price change: 5.7%
  • 2021 median home price: $305,078

8. Seattle-Tacoma-Bellevue, Washington

  • Sales change: 9.6%
  • Price change: 7.5%
  • 2021 median home price: $666,754

9. Worcester, Mass.-Connecticut

  • Sales change: 8.4%
  • Price change: 8.2%
  • 2021 median home price: $397,188

10. Tampa-St. Petersburg-Clearwater, Florida

  • Sales change: 9.6%
  • Price change: 6.8%
  • 2021 median home price: $335,814

 

Article includes a 2:30-min video of Boise market conditions:

https://www.cbsnews.com/news/10-top-housing-markets-of-2022-think-boise-not-new-york-city/

Forever Home?

Do a thorough investigation on where you’re moving!

To Rick Brown and Jeanne Brown, finding a forever home has seemingly taken forever.

In just five years, the couple—he’s 71 and she’s 72—bought or built two different houses that they planned to live in for the rest of their lives. But their tastes changed—so they decided to pick up stakes both times. Now they have settled on a third home that seems to be their final choice.

If there is one takeaway, Mr. Brown says, never use the words “forever home.”

Like the Browns, many couples near or in retirement embark on a quest to find the perfect place to spend their twilight years. Soon, however, some people realize that what’s perfect now may be less than ideal later. Poor health and dwindling finances are obvious reasons some seniors choose to move. Other retirees retool their priorities when they realize how much they miss the grandchildren or hate their new neighborhood.

In truth, most home buyers don’t stay in their homes as long as they think they will, says Jessica Lautz, vice president of demographics and behavioral insights with the National Association of Realtors, a trade group. “People may not want to move,” she says, “but they may decide to because life happens.”

The Browns began their forever-home quest in 2011, when they sold a bed-and-breakfast in Annapolis, Md., that Mrs. Brown had operated since 1997. Cash flow had been good for a while, but in time, neighbors started listing their homes as vacation rentals, cutting into the B&B business. Then came the 2007-09 recession. When Mr. Brown retired from his full-time career in banking in 2010, the couple decided to close their business. They sold their B&B—purchased for $540,000 in 1996—for $925,000.

The Browns found their first forever home in Southport, N.C., near the Intracoastal Waterway. They paid about $200,000 for land and another $400,000 to build “the nicest place we have ever lived in,” Mr. Brown says. Still, the nearest big city was Wilmington, N.C., over a half-hour away. “We loved the area and our home there, but it was isolated,” Mr. Brown says. “We were accustomed to good restaurants and the theater, and the like.”

While living in Southport, the Browns traveled west to Asheville, N.C., for a tennis tournament. Driving around, they realized Asheville offered the best of both worlds—the trappings of city life and the outdoor activities in the beautiful Blue Ridge Mountains. So, they sold their Southport home for $480,000 in 2016.

“Where we got clobbered was the purchase price of the lot,” Mr. Brown says, which the couple had purchased right before the recession of 2007-09. “When we left, the value of the lot had fallen about 50%.”

The couple spent about $470,000 to build their second forever home, situated on the side of a mountain about 15 minutes from downtown Asheville. To stay busy, both Browns took part-time jobs, volunteered and pursued their hobbies. “But despite being a nice area, we had a tough time breaking into the social arena,” Mr. Brown says. “I didn’t click with the different types of groups. I thought, ‘Maybe this isn’t the place for us.’ ”

That realization led to their third—and current—forever home. In 2019, the Browns sold their house in Asheville for about $570,000 and moved to the Villages, a sprawling 55-and-older community in central Florida. There, they bought a modest three-bedroom home for $408,000. Mr. Brown plays golf, softball and pickleball; Mrs. Brown golfs, belongs to a book club and teaches pottery classes. Together they foster puppies.

Mr. Brown says he and his wife have no regrets—their experiences in Maryland and North Carolina helped them realize why Florida is such a good fit. To them, an enjoyable retirement is more about the lifestyle and less about the house. “Right now, we’re saying we’re going to stay put.”

Read more stories plus 400 comments too:

Link to WSJ Article

Where to Move

Though this graph is from 2019, I think it shows that people don’t move far from home.

Hat tip to Rob Dawg for sending in this link with loads of data:

https://lusk.usc.edu/sites/default/files/attachments/USC_CasdenRealEstateEconomicsReport_Spring.pdf

Here is the map for most of Riverside County – Temecula is a good option for movers because it’s close to SD County and a place where you can buy a newer home for less and still keep your SD job and doctors:

High Desert

How about moving to the High Desert? It’s close enough to San Diego that you could re-visit when necessary, and once we get self-driving cars, you could commute!  Here’s a link to the 67 homes for sale in Joshua Tree today:

https://cmps.re/5RLVsX7

Here’s a link to homes for sale under $620,000 in Yucca Valley, which is 27 miles north of Palm Springs and has a population of 22,000+ people at 3,369ft elevation:

https://cmps.re/hXwYOcA

Thanks to the latimes.com:

THE GREAT CALIFORNIA MIGRATION
Trading big city for high desert

YUCCA VALLEY, Calif. — Tyler Gaul strode across the sprawling backyard of his Yucca Valley home and surveyed the rocky hillside a few steps away from the pool and basketball court that sit atop his 2-acre property.

When he first moved to the desert from Los Angeles last fall, this jagged landscape granted him a sense of serenity as the crowded city he left behind grappled with a pandemic.
Gaul, who runs his own skin care company, knew it was time to move when he could no longer exercise outside his Echo Park apartment — his respite from stay-at-home orders — because of wildfire smoke polluting the air. Constant and worsening wildfires, paired with a public health crisis, proved to be too much.

“I have a lung condition, and I was like, ‘No, I can’t do this anymore,’ ” he recalled.

So he set out for the desert.

Like many other city dwellers who have fled urban sprawl over the last year and a half, Gaul sought shelter in a more isolated desert community in hopes of finding more space and clean air, and limiting his exposure to the coronavirus. Local real estate agents say that the migration is driven by a desire for affordable housing and large plots of land, a move further propelled by the nation’s sudden shift toward teleworking.

Until last year, Gaul hadn’t seen himself as the desert type or thought of making an escape from the city. But since moving, he and his girlfriend have hosted pool parties for their friends living in the city; they’ve learned how to tackle home repairs, like the time there was an irrigation leak; they stood in stillness during their first desert winter and listened as the sound of snow falling off trees pelted the craggy ground below.

“One day, we were in the pool and there was this huge owl, and it just like swept down and looked like a huge, silent airplane. It was just, like, so majestic,” Gaul, 35, said as he lifted a plastic cover to check for a tarantula that had recently been roaming the side of his home.

The high desert communities of Yucca Valley, Pioneertown and Joshua Tree about 130 miles east of Los Angeles have been inundated not only with new home buyers but also renters and city folk who come to work remotely at one of the many Airbnbs that have cropped up in recent years — sometimes to the chagrin of locals who could live without hearing the loud parties, or driving through the dust kicked up by Teslas plowing through dirt roads in a rush that those used to a slower pace of life have trouble understanding.

“It feels like the zeitgeist of the desert,” said Tom Murtagh, a Realtor in Twentynine Palms. “It’s a time of change. A lot of people here are having a tough time with it and I am very sympathetic. It’s a tough situation — gentrification reached the desert and it’s good and bad. There’s money to fix things, but it’s a double-edged sword.”

Although the pandemic accelerated migration to the high desert, the shift was gaining steam in the years before.

Jean Michel Alperin moved to Yucca Valley with his family in 2018. He and his wife, Sarah Scott Alperin, were disappointed with the lack of options in their price range in L.A. despite looking at homes in neighborhoods across the city. Jean Michel was on the brink of helping to revitalize and reopen Pioneertown’s Red Dog Saloon and had pondered making the commute to the desert a few days a week for work.

“While I was doing business here for a couple days I decided to see Realtors. We saw four places, and the fourth was the home that we bought. It was one of those dream homes. It seduced me in this very intimate way. Kind of like when you meet somebody, it was a romance,” Alperin, 40, said. “It was a total about-face. And it was tough, for sure. There’s a lot of differences moving from Echo Park to Yucca.”

Alperin said that he doesn’t necessarily miss the people he could meet in L.A. — he’s bonded with other transplants from Echo Park here in the desert — but he does miss the wealth of cafes filled with people poring over books.

“That’s kind of the feeling, that there’s just one place. You don’t have options,” he said. “But that’s part of coming out here. We’re all kind of frontier people.”

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Where to Retire

It’s hard to believe that we got smoked by Cleveland, Chicago, and Detroit (and Ventura didn’t make the list!), but our housing cost is a barrier. They have many reviews of each city, and for those who take politics into the decision-making process, these links include the voting history in last five presidential elections (including 2020):

America’s Best Cities* for a Healthy (and More Affordable) Retirement

  1. Seattle, Washington
  2. Minneapolis-St. Paul, Minnesota
  3. Denver, Colorado
  4. Portland, Oregon
  5. Hartford, Connecticut
  6. Omaha, Nebraska
  7. Baltimore, Maryland
  8. Pittsburgh, Pennsylvania
  9. Cleveland, Ohio
  10. Salt Lake City, Utah
  11. Warren, Michigan
  12. Newark, New Jersey
  13. Richmond, Virginia
  14. Milwaukee, Wisconsin
  15. Grand Rapids, Michigan
  16. Cincinnati, Ohio
  17. Kansas City, Missouri
  18. Tampa-St. Petersburg, Florida
  19. Chicago, Illinois
  20. Providence, Rhode Island
  21. St. Louis, Missouri
  22. Tucson, Arizona
  23. Buffalo, New York
  24. Columbus, Ohio
  25. Atlanta, Georgia
  26. Indianapolis, Indiana
  27. Austin, Texas
  28. Dallas, Texas
  29. Fort Lauderdale, Florida
  30. Raleigh, North Carolina
  31. Sacramento, California
  32. Oklahoma City, Oklahoma
  33. New Orleans, Louisiana
  34. Louisville, Kentucky
  35. Orlando, Florida
  36. Nashville, Tennessee
  37. Philadelphia, Pennsylvania
  38. Miami, Florida
  39. Fort Worth-Arlington, Texas
  40. Phoenix, Arizona
  41. San Antonio, Texas
  42. Virginia Beach, Virginia
  43. Charlotte, North Carolina
  44. Houston, Texas
  45. Detroit, Michigan
  46. Las Vegas, Nevada
  47. Riverside, California
  48. Memphis, Tennessee
  49. Nassau County-Suffolk County, New York
  50. San Francisco, California
  51. Silver Spring-Frederick-Rockville, Maryland
  52. Boston, Massachusetts
  53. San Jose, California
  54. Washington, DC–Arlington, Virginia
  55. Anaheim, California
  56. Oakland, California
  57. San Diego, California
  58. Honolulu, Hawaii
  59. New York, New York
  60. Los Angeles, California

*Includes surrounding metropolitan areas, as defined by the United States Census Bureau, including one or more central cities and the surrounding county or counties (which comprise the suburbs).

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