Boise, Cape Coral, Austin, Phoenix: Housing Markets With Biggest Price Gains

Question: What do the real estate markets of Austin, Boise, Cape Coral and Phoenix have in common, going into 2022?

Answer: Tremendous home-price growth.

According to a recent report from the Federal Housing Finance Agency (FHFA), Austin, Boise, Cape Coral and Phoenix posted year-over-year price gains of 28% or more.

The Boise real estate market topped the list with a whopping 37% annual increase in home values. The downside is that these red-hot housing markets continue to become less and less affordable for residents with average income.

Soaring Prices in Austin, Boise, Cape Coral, Phoenix

On November 30, the FHFA reported that Austin, Boise, Cape Coral and Phoenix had the highest level of home-price appreciation during 2021. They pointed to the Boise housing market, in particular, for leading the charge.

According to the FHFA report:

“House prices rose in all of the top 100 largest metropolitan areas over the last four quarters. Annual price increases were greatest in Boise City, ID, where prices increased by 37.3 percent.”

Of course, when some things go up, other things go down. Due to the unprecedented rise of home prices in real estate markets like Austin and Boise, housing affordability has plummeted. In fact, those two cities have been singled out in numerous reports for their newfound lack of affordable housing.

Earlier this year, Oxford Economics named the Boise, Idaho real estate market as one of the least affordable in all of North America. This was based on a comparison between home prices and local income levels.

To quote the Oxford Economics report:

“Potential buyers will find homes most out of reach in Vancouver, Boise (Idaho), Toronto, Portland (Oregon), Hamilton (Ontario), Las Vegas, San Jose, and L.A.”

The housing markets in Cape Coral and Phoenix aren’t as pricey as cities like Austin and Boise. Yet. But they’re headed in that direction. They were ranked among the top four U.S. metros for home-price appreciation, according to FHFA data.

The Top 10 Housing Markets for Price Growth

Among the nation’s 100 largest metros, the following real estate markets saw the most home-price growing during 2021. The percentage beside each metro shows the year-over-year increase in house values, according to FHFA.

  1. Boise-Nampa, ID: 37.3%
  2. Cape Coral-Fort Myers, FL: 34.7%
  3. Austin-Round Rock-Georgetown, TX: 33.8%
  4. Phoenix-Mesa-Chandler, AZ: 28.9%
  5. Stockton, CA: 28.8%
  6. Salt Lake City, UT: 28.1%
  7. Riverside-San Bernardino-Ontario, CA: 26.8%
  8. North Port-Sarasota-Bradenton, FL: 25.6%
  9. West Palm Beach-Boca Raton, FL: 25.5%
  10. Tampa-St. Petersburg-Clearwater, FL: 25.2%

As you can see, several Florida real estate markets appeared on the list. These include the metro areas around Cape Coral, Sarasota, Tampa and West Palm Beach. But none can match the record-breaking (and worrying) price growth of the Boise, Idaho housing market.

Common Thread: Lopsided Supply and Demand

There’s a reason home prices are skyrocketing in housing markets like Boise, Austin, Cape Coral and Phoenix — among others. It’s good old-fashioned supply and demand.

Specifically, these real estate markets have plenty of demand but very little supply.

As of November 2021, all of these metro areas had less than a two-month supply of homes for sale. That’s well below what is considered to be a balanced housing market (if such a thing exists anymore).

Many cities across the U.S. have low inventory levels right now. But the demand from buyers is particularly strong in real estate markets like Austin, Boise and Phoenix. So those areas are seeing a higher level of price growth.

Some housing analysts and economists have predicted that the market will cool down a bit in 2022. Even so, it will be many months before the red-hot markets mentioned above start to favor home buyers. Seller’s will have the upper hand for a while longer.

Does It Make Sense to Buy in These Areas?

Home buyers in fast-rising housing markets should pause to consider the wisdom of a purchase. It’s not our place to encourage or discourage home purchases, but to provide helpful insight for buyers.

That being said, there are some potential risks to buying a home in a housing market like Austin or Boise. Both of these metro areas are considered to be overvalued, and they’ll likely move further in that direction in 2022.

Tight inventory conditions will probably shield these white-hot real estate markets from a full-on crash scenario. But there’s bound to come a time when home-price appreciation slows considerably.

Prices might even decline at some point in the near future, as the market corrects itself. We’ve seen it before. Maybe not in Austin or Boise, but that’s only because they’re new to the housing boom situation. These metro areas have never seen anything like what’s happening now. It’s uncharted territory.

The thing about uncharted territory is, you never know what lies ahead.

Disclaimer: This article includes third-party predictions relating to home prices and other housing trends. They are the equivalent of an educated guess. The Home Buying Institute makes no claims or assertions about future real estate conditions.