Neighborhood in San Jose

Philadelphia and San Jose: Biggest Home-Price Forecasts Among Major Cities

In a recent analysis conducted by the Home Buying Institute, Philadelphia and San Jose were found to have the highest home-price forecasts among major U.S. cities through the fall of 2019.

Strong Housing Market Forecasts for San Jose and Philadelphia

Home prices in most U.S. cities are expected to continue rising in 2019. But the amount of appreciation could vary widely from one city to the next, as is usually the case.

We wanted to know which major cities across the country are expected to have the biggest home-price gains over the next year or so. So we looked at the one-year forecasts provided by the real estate research team at Zillow, for the 30 most populous cities in the country.

Summary of findings:

  • Among the 30 largest cities, San Jose, California and Philadelphia, Pennsylvania had the highest home-price forecasts through fall 2019.
  • The company predicted that the median home value in San Jose would rise by 16.2% over the next 12 months. For Philadelphia, they predicted a one-year increase of 15.3%.
  • At the other end of the spectrum, Louisville, Kentucky and Indianapolis, Indiana had the lowest home-price forecasts among the 30 largest cities. In both of those cities, Zillow predicted that the median home value would actually drop slightly over the next 12 months.
  • Home prices for the nation as a whole were forecast to rise by 6.4% over the next year.

Note: These home-price forecasts were obtained from Zillow on November 24 – 25, 2018. They are one-year forecasts, so they project into the fall of 2019.

San Jose: Double-Digit Price Gains, Past and Present

The housing market in San Jose shrank over the past few years, with active listings dropping to record lows. This led to bidding wars and rapid price gains. While this once red-hot market appears to be cooling down, it still earned the strongest home-price forecast among the country’s most populous cities.

According to a November 2018 posting on Zillow’s website:

“San Jose home values have gone up 15.3% over the past year and Zillow predicts they will rise 16.2% within the next year.”

This is largely a tech story. High-paid tech workers lured by companies like Google and Apple have flooded into Silicon Valley over the past few years. Many of them settle in San Jose, the most populous city in that region.

San Jose’s population rose above the one-million mark last year, according to the U.S. Census Bureau. But the city’s housing market hasn’t keep pace with that growth. This has led to inventory shortages that are still evident today.

Housing inventory in San Jose has increased over the past year or so, but there still aren’t enough properties available to satisfy demand. So it’s no surprise to see such a big home-price forecast for the San Jose real estate market.

Philadelphia Housing Market ‘Heating Up’ More Than Most

Earlier this month, we reported that Philadelphia was one of a handful of housing markets that are heating up for 2019. This was based on a report from the real estate brokerage Redfin.

In a November 2018 press release, the company reported:

Wilmington, Delaware, Philadelphia and Atlanta lead the handful of metro areas where supply is shrinking, leaving more homes to go under contract within days, and for above-list price than a year ago.”

Philadelphia’s housing market inventory (the number of homes for sale) dropped by nearly 23% in October 2018, compared to the same period a year earlier. As a result, homes are selling faster, and more of them are selling above the original list price. These trends indicate strong demand from home buyers.

Among the 30 most populous cities in the country, Philadelphia had the second-highest home price forecast stretching into fall 2019. In November, Zillow’s research team stated:

“Philadelphia home values have gone up 11.4% over the past year and Zillow predicts they will rise 15.3% within the next year.”

In these and similar real estate markets, home buyers who are “on the fence” might want to consider purchasing sooner rather than later to get ahead of rising costs.

Disclaimer: This article contains housing-related trends, data and forecasts provided by third parties outside of our company. The Home Buying Institute (HBI) makes no claims or assertions about future economic conditions.

Atlanta Skyline

Report: These 8 Housing Markets Are ‘Heating Up’ the Most for 2019

What do Wilmington, Philadelphia, Atlanta and Rochester have in common? According to a recent housing industry report and forecast, these four real estate markets are currently “heating up” more than any other metro area in the country.

8 Housing Markets ‘Heating Up’ the Most

Recent reports have shown that the pricier coastal real estate markets like San Jose, California and Seattle, Washington are finally cooling down. In those types of markets (which have experienced a huge run-up in prices over the last few years), home values are now rising more slowly. And sellers are starting to make price cuts due to softening demand.

But according to a recent report from the real estate brokerage Redfin, many of the more “affordable inland metro areas are heating up” as we approach the end of 2018. These housing markets are poised for steady price growth and increased competition in 2019.

These warming markets include Wilmington, Delaware; Philadelphia, Pennsylvania; Atlanta, Georgia; and Rochester, New York. In these and other metros listed in the report, housing supply is shrinking and homes are selling faster.

Methodology: To determine which real estate markets across the country are warming up the most, Redfin “ranked the top 25 metro areas with populations of at least 500,000 people.” They looked at three indicators that suggest how active and competitive each market was, as of fall 2018:

  • Declines in housing inventory (the number of homes for sale)
  • Increases in the number of homes going under contract within two weeks
  • Increases in the share of homes selling for more than their list price

Based on this analysis, the group determined that the following metro-area housing markets are heating up the most:

  1. Wilmington, Deleware
  2. Philadelphia, Pennsylvania
  3. Atlanta, Georgia
  4. Rochester, New York
  5. Greensboro, North Carolina
  6. Akron, Ohio
  7. Richmond, Virginia
  8. Buffalo, New York

Of course, the degree of “warming” varies from one real estate market to the next. Each metro area has a different supply-and-demand dynamic. Here’s a more in-depth look at the four metro areas that topped their list.

Wilmington, DE: Housing Inventory Has Shrunk

In Wilmington’s housing market, the number of homes for sale decreased by -24.5% in October 2018, compared to a year earlier. That means there are significantly fewer homes on the market today than in the past. Typically, this kind of inventory contraction leads to increased competition among home buyers and sends prices north. Perhaps that’s why the company forecast that the Wilmington housing market was “heating up.”

Philadelphia, PA: Strong Home-Price Forecast for 2019

Like the other top four cities on this list, Philadelphia’s housing market has also shrunk over the last year or so. Homes are selling quickly due to strong demand and limited supply. According to a November 2018 forecast from Zillow: “Philadelphia home values have gone up 11.0% over the past year and Zillow predicts they will rise 12.8% within the next year.” That’s one of the strongest long-range forecasts we’ve seen for a major U.S. city.

Atlanta, GA: Homes Are Selling Quickly

According to the report mentioned above, nearly 29% of homes listed for sale in Atlanta were off the market within two weeks. That was for October 2018. About 21% of homes sold for more than the original list price. These indicators point to a market with strong demand from buyers and account for Atlanta’s positive housing forecast for 2019.

Rochester, NY: Many Offers Above List Price

Rochester, New York is another metro area where homes are selling quickly, and often above the list price. Based on the above report, 36% of homes sold within two weeks and for above the initial listing price. A recent forecast from the economic research team at Zillow predicts that prices in Rochester will continue inching upward into 2019.

Disclaimers: This article contains data, forecasts and reports provided by third parties not associated with our company. That information is deemed reliable but not guaranteed. The Home Buying Institute (HBI) makes no claims or assertions about future housing market conditions.

San Diego neighborhood. Source: Flickr, dmcdevit

San Diego Gets a ‘Slow but Steady’ Housing Forecast for 2019

A recent forecast for the San Diego real estate market suggests that home prices will continue rising into 2019, but at a slower pace than the previous year.

Forecast for San Diego Real Estate Market

The real estate research team at Zillow recently predicted that the median home value for San Diego, California would rise by around 4.3% over the next 12 months. This forecast was issued in November 2018, so it stretches into the fall of 2019.

As of November, the median home value in San Diego was $629,100. That was an increase of 6.2% over the previous 12 months.

So this particular forecast suggests that house values in San Diego will rise a bit more slowly next year than they did in 2018. This mirrors broader projections for the nation as a whole. The general consensus among housing analysts and economists appears to be that annual home-price appreciation will cool a bit over the coming months.

Rising Prices Create Affordability Issues for Many

Affordability has become an issue for many would-be home buyers in the San Diego area. This is another trend that is affecting many major cities across the country, but particularly in the western coastal markets.

During the 20-year period from 1998 to 2018, the median home value in San Diego rose by around 217%. But the median household income only rose by around 77% during that same 20-year timeframe.

This is true for many cities across California. Home prices have risen at a faster pace than income over the past couple of decades, and that has created affordability issues for a lot of residents.

The bottom line is that it has become harder for a person with median income to purchase a median-priced home in the San Diego area. These affordability issues could affect the local housing market in 2019, by softening demand.

In fact, the California Association of REALTORS® pointed to this trend in its forecast for the state’s housing market, published in October:

“A combination of high home prices and eroding affordability is expected to cut into housing demand and contribute to a weaker housing market in 2019, and 2018 home sales will register lower for the first time in four years.”

Sales have declined as well. Last month, the property analytics company CoreLogic reported that home sales across San Diego County dropped by 17.5% in September, compared to a year earlier. That was the lowest level of sales activity for a September in 11 years, and it could be a side effect of the affordability issues mentioned earlier.

Clearly, there is a shift occurring here. This is partly what’s driving the more modest forecasts for the San Diego housing market in 2019.

Positive Sign: Housing Inventory Rose in 2018

One bit of good news for home buyers planning to enter the market in 2019 is that housing inventory has risen over the past year. As of September 2018, the San Diego housing market had about a three-month supply of homes for sale. That was up from a low of about 1.5 months at the end of 2017.

This means there are more homes listed for sale today than last year. This is a trend we are seeing in a lot of housing markets across the western U.S. right now. And it’s good news for home buyers, because it means they will have more properties to choose from (and possibly less competition) compared to those who purchased in the past.

Inventory growth could also have a moderating effect on annual home-price appreciation, by tilting the scales of supply and demand toward a more balanced position.

Disclaimer: This article contains predictions and forecasts relating to the housing market in San Diego, California. Those forward-looking statements were provided by third parties not associated with our company. The publishers of this website make no claims or assertions about future housing conditions.

Jacksonville waterfront

Jacksonville Leads Housing Forecasts Among Florida’s Major Cities

Jacksonville waterfront

Florida’s statewide Realtor association recently issued an overall rosy assessment of the state’s real estate market. Forecasts from other industry groups suggest that home prices in Jacksonville could rise by double digits over the next year, outpacing most other Florida cities.

Forecasts for Biggest Housing Markets in Florida

According to a November 1, 2018 press release from Florida Realtors®, the state’s “housing market had more sales, higher median prices, more pending sales and more new listings in 3Q 2018,” compared to the same time a year ago.

That’s for the state as whole. But when it comes to buying a home, local conditions matter more than statewide trends. And home-price appreciation can vary widely from one city to the next. So we looked to the housing and economic research team at Zillow to see what they expect for 2019, at the city level.

As it turns out, Jacksonville has one of the strongest housing market forecasts stretching into 2019. Zillow’s analysts predicted that the median home value in Jacksonville would rise by a whopping 12.6% over the next year. (This forecast was issued at the end of October 2018, so it extends into the fall of 2019.)

For comparison, here are Zillow’s predictions for other major cities in Florida.

  • Tampa: At the end of October 2018, the median home value in Tampa was around $216,000. At that time, the company was predicting that the median would rise by 6% over the next 12 months.
  • Orlando: The median house value in Orlando, Florida rose to around $234,000 as of fall 2018. That was a gain of roughly 10% from a year earlier. Looking forward, the group predicts that the median home price in Orlando will rise by 5% through fall of 2019.
  • St. Petersburg: The housing market in St. Petersburg has also experienced double-digit home price growth over the last year or so. By Zillow’s estimate, the median value rose 12.1% over the past 12 months (as of November 1, 2018). Their one-year forecast for this market calls for an additional gain of 5% over the next year.
  • Tallahassee: Among the major cities in Florida, Tallahassee had one of the lowest median home values. Zillow estimated it at $177,400, as of November 1. They predicted that the median home price in Tallahassee would rise by 4.3% over the coming year.
  • Sarasota: The real estate market in Sarasota has experienced smaller price gains than the cities listed above. The median home value for the city rose 5% over the past year, with a 12-month forecast calling for an additional 4% in appreciation.
  • Miami: As of fall 2018, the median house price within the Miami real estate market had reached $333,600. That marked a rise of about 4.6% over the previous year. The company’s economists predicted that the median value would rise by 3.6% over the next year or so.
  • Palm Beach: One of Florida’s most expensive real estate markets, Palm Beach has experienced a leveling of home values. In fact, Zillow reported a slight dip in the median home value for Palm Beach over the past year. Looking forward, however, they predict that the median price point will rise by 2.5% over the next year.
  • Cape Coral: Among the major Florida cities on this list, Cape Coral had the weakest housing market forecast extending over the next 12 months. At least, in terms of price growth. As of November 1, 2018, Zillow was forecasting a one-year change of just 0.1% for this market.

Granted, these are just forecasts. They are the equivalent of an educated guess based on current housing trends and expectations for the near future. So we probably shouldn’t get too hung up on the exact numbers being forecasted here.

The big takeaway here is that, while home prices across Florida are expected to rise in 2019, conditions can vary quite a bit at the city level. Home buyers who are planning to enter the real estate market in 2019 should research local conditions, as part of their preparation.

Disclaimer: This article contains predictions and forecasts for various housing markets across Florida. Those forward-looking statements were issued by third parties not associated with our company. As a general rule, the Home Buying Institute does not make claims or assertions about future housing conditions.

Price reduced sign

Hot Housing Markets Like Denver, San Jose and Seattle Are Cooling

Price reduced sign

A recent report showed that some of the nation’s hottest housing markets are beginning to slow down. Slower home sales have been reported in housing markets like Denver, Oakland, Seattle and San Jose.

But despite this trend, the latest real estate forecasts suggest that home prices in most of these “cooling” markets will continue to climb in 2019.

Hot Housing Markets Are Slowing Down

Is a cooling trend coming to the U.S. real estate market? In some cities and metro areas, the answer appears to be yes. In fact, cooling trends are being reported for some of the nation’s hottest housing markets, like Denver, San Jose and Seattle.

According to a recent report published by Redfin, a nationwide real estate brokerage, the markets with the fastest home sales during the spring of 2018 are now experiencing a significant slowdown.

The company based its analysis on the speed at which homes sell within a particular area. In some of the hottest and fastest-moving real estate markets (like Seattle and San Jose), the average number of days on market has dropped considerably. This suggests a softening of demand in those areas.

To quote the report:

“…this spring [2018] there were fourteen metro areas around the country where half or more of the homes that were listed for sale between March 5 and April 29 went under contract within two weeks. By mid-September, every single market saw its share of homes selling that quickly fall to below 50 percent, with spring’s fastest markets, namely Seattle and San Jose, California, seeing the largest declines, falling by more than 35 percentage points since spring and over 20 percentage points from a year earlier.”

In other words, homes are staying on the market longer in these and other hot housing markets across the country.

And that’s not surprising, when you consider how much home prices have risen in those areas. In San Jose, for example, the median home value rose by a whopping 19% over the past year according to Zillow. Denver and Seattle (also cited in this report) have also experienced steady price growth over the past few years — though nothing like San Jose.

So perhaps these markets are “topping out” in terms of affordability. It’s a cycle we’ve seen many times in the past. When prices rise to the point that the average resident cannot afford to buy a median-priced home, it leads to a weakening of demand. This in turn takes some of the steam out of home-price appreciation.

Sellers Dropping Their Asking Prices

Price reductions are also becoming more common in the nation’s hottest housing markets, like Denver, Seattle and San Jose. Sellers in these and other areas are realizing there’s not the same level of demand as there was in 2016 or 2017. Homes are staying on the market longer.

“As a result, sellers are having to wait longer for offers, and more sellers are dropping their list price to attract buyers,” said Daryl Fairweather, Redfin’s chief economist.

The table below includes some of the hottest real estate markets in the U.S. For each metro area, it shows the percentage of homes that went “off market” or under contract in two week or less. By comparing the August-to-September columns for 2017 and 2018, we can see which markets appear to be slowing down. These include Seattle, San Jose, Portland, Oakland and (to a lesser extent) Denver.

Percent of Homes that Went Off Market in Two Weeks or Less
Metro Area Aug. 14 –
Sept. 10, 2017
Mar. 5 – Apr. 29,
2018
Aug. 13 –
Sept. 9, 2018
Warren, MI 37% 51% 35%
Tacoma, WA 41% 61% 39%
Seattle, WA 56% 72% 35%
San Jose, CA 58% 66% 31%
San Francisco, CA 45% 54% 40%
Sacramento, CA 38% 50% 32%
Portland, OR 42% 52% 33%
Omaha, NE 42% 59% 47%
Oakland, CA 50% 61% 38%
Grand Rapids, MI 41% 58% 44%
Denver, CO 47% 62% 41%
Cambridge, MA 49% 60% 44%
Boston, MA 39% 52% 38%
Boise, ID 27% 52% 36%

We can also discern from this table that the “cooling” trend is not happening in all of the hot real estate markets. In fact, the percentage of homes that went under contract in two weeks or less actually rose in some metros, from 2017 to 2018. Boise, Omaha and Grand Rapids all fall into that category.

According to Redfin:

“The common factor among the metro areas that are not slowing down: they’re all smaller cities away from the coasts where homes are much more affordable.”

What conclusions can we draw from this? Among other things, these trends suggest that a lack of affordability is possibly the biggest factor that is causing the nation’s previously red-hot markets to cool down.

Related: Forecasts for 35 largest U.S. metros

Forecast: Home Prices Expected to Keep Rising

Despite the slowing sales cited above, hot housing markets like Seattle, San Jose and Denver still tend to favor sellers over buyers. Strong demand and limited inventory will keep these markets highly competitive for the foreseeable future.

The latest forecasts suggest that these metro areas could see smaller home-price gains in 2019, compared to the past couple of years. But prices are expected to continue rising in San Jose, Denver, and nearly every other city in the table above.

The bottom line to all of this: While some of the nation’s hottest housing markets are cooling, they clearly haven’t gone “cold.” Home sales might be slowing, and price growth might be happening at a slower pace than in previous years. But these markets are still very competitive for home buyers.

Hilly San Francisco

California Housing Forecast for 2019: Rising Prices and a ‘Weaker’ Market

On October 11, the California Association of REALTORS® (C.A.R.) published its 2019 California Housing Market Forecast. Among other things, the industry group predicts that rising home prices and reduced affordability will lead to a slower, weaker housing market in 2019.

California Housing Market Forecast for 2019

Affordability has become a big problem in many real estate markets across the state of California. This is especially true within the San Francisco Bay Area, where a typical resident with average income can scarcely afford to own a home. These issues have also arisen in some of the large coastal cities like San Diego and Los Angeles.

According to the C.A.R. forecast for the California housing market in 2019, these trends could result in weaker demand and fewer home sales next year.

“A combination of high home prices and eroding affordability is expected to cut into housing demand and contribute to a weaker housing market in 2019, and 2018 home sales will register lower for the first time in four years,” the group stated.

They expect to see a modest decline in the sale of existing single-family homes next year, along with a general cooling trend for prices. According to C.A.R. president Steve White: “While home prices are predicted to temper next year, interest rates will likely rise and compound housing affordability issues.”

During 2017, the median home price for the state of California rose by 7.2% year over year. During 2018, it is expected to rise by around 7%. But looking forward, into 2019, C.A.R. predicts that the median home value will rise by just 3.1%.

Of course, real estate conditions can vary widely from one city to another. Most of their 2019 housing market forecast pertains to California as a whole. But when you drill down to the city and metropolitan level, there’s quite a bit of variance.

For example, in the tech-driven city of San Jose, home prices are expected to rise by much more than the 3.1% figure projected for the state as a whole. The economic research team at Zillow recently predicted that the median home value in San Jose would rise by nearly 14% over the next 12 months (through October 2019). That bold forecast is largely due to strong demand and tight inventory conditions in San Jose.

Statewide, however, the C.A.R. forecast predicts slower home-price growth during 2019 compared to this year and last.

Rising Mortgage Rates, Home Prices Could Reduce Affordability

The state’s Realtor association also predicted a slight rise in mortgage rates for 2019. They anticipate that the average rate for a 30-year fixed home loan will rise to 5.2% in 2019, compared to an average of 4.7% in 2018. This long-range outlook closely resembles forecasts issued recently by both Freddie Mac and the Mortgage Bankers Association (more).

Granted, that’s not a huge increase in lending rates. But when you add in the prospect of additional home-price gains, it could definitely reduce affordability for a lot of would-be buyers. This is partly why the C.A.R. forecast for California’s housing market predicts fewer home sales in 2019. With steadily rising costs, fewer and fewer people will be able to afford a home purchase.

According to the report: “The California median home price is forecast to increase 3.1 percent to $593,450 in 2019, following a projected 7.0 percent increase in 2018 to $575,800.”

Disclaimer: This article includes forecasts and predictions for the California real estate market in 2019. Those projections were made by third parties not associated with the Home Buying Institute. As a general rule, HBI makes no claims or predictions about future housing conditions.

Real estate closing

Average Closing Costs in U.S. and 33 Largest Metros, as of 2018

A housing report published in October showed the average amount of closing costs paid by a “typical” home buyer in 33 of the largest metropolitan areas in the United States. Nationally, home buyer closing costs averaged $6,246 in July of 2018. Among the metros included in this report, costs were lowest in Cincinnati, Ohio ($4,259) and highest in the New York City area ($11,232).

Average Closing Costs Among Home Buyers: 2018

This report was created by the real estate information company Zillow and the San Francisco-based company Thumbtack. Though it was published in October, it used home-price data from July of 2018. Those home values are likely higher now than they were back in the summer. So the average closing costs might be a bit higher as well.

Still, this analysis gives us some insight into what a typical home buyer pays to close on a home. It also provides a good comparison between buying costs in different parts of the country.

The following table was adapted from the Zillow / Thumbtack report:

Metropolitan Area Median Home Value (July 2018) Closing Costs
United States $218,000 $6,246
Atlanta, GA $206,300 $4,877
Austin, TX $298,000 $6,352
Baltimore, MD $264,700 $8,196
Boston, MA $456,400 $8,410
Charlotte, NC $196,800 $4,411
Chicago, IL $219,800 $7,322
Cincinnati, OH $162,000 $4,259
Cleveland, OH $141,500 $4,286
Columbus, OH $182,600 $4,286
Dallas-Fort Worth, TX $231,100 $6,352
Denver, CO $397,800 $5,962
Detroit, MI $156,100 $4,366
Houston, TX $199,300 $6,352
Kansas City, MO $182,600 $5,012
Las Vegas, NV $266,200 $5,559
Los Angeles-Long Beach-Anaheim, CA $643,300 $7,674
Miami-Fort Lauderdale, FL $275,700 $7,398
Minneapolis-St Paul, MN $261,300 $5,271
New York, NY $429,700 $11,232
Orlando, FL $228,700 $7,398
Philadelphia, PA $228,400 $6,701
Phoenix, AZ $256,000 $4,849
Portland, OR $391,800 $5,403
Riverside, CA $358,600 $7,674
Sacramento, CA $400,800 $7,674
San Antonio, TX $185,900 $6,352
San Diego, CA $584,100 $7,674
San Francisco, CA $954,100 $7,674
San Jose, CA $1,292,600 $7,674
Seattle, WA $487,600 $5,741
St. Louis, MO $161,800 $5,705
Tampa, FL $205,900 $7,398
Washington, DC $397,500 $8,201

Charges and Fees for a Real Estate Transaction

Closing costs are the various fees and charges that can accumulate during a typical real estate transaction. Both the buyer and seller can incur them. The buyer’s closing costs are usually higher, especially when a mortgage loan is being used to complete the purchase.

They can be paid separately by the individual parties, or the seller can agree to cover some of the buyer’s costs. It varies. These kinds of details are typically ironed out during initial negotiations and written into the purchase agreement. Who pays what will largely depend on the current state of the local real estate market, and which party has more negotiating leverage.

Closing costs can vary widely from region to region, partly due to differences in housing costs, taxes, etc. You can see this clearly in the table above.

They can also vary from one home buyer to the next within the same region. For instance, some borrowers choose to pay points at closing in exchange for a lower mortgage rate. Others choose to forego this extra upfront cost, taking a higher interest rate instead. This is just one example of a variable that can affect the buyer’s finalized closing costs.

According to the Zillow report mentioned earlier:

“Closing costs add thousands more to the total amount buyers should be prepared to pay. These costs frequently include the origination fee, appraisal, transfer taxes, the first year of homeowners insurance, title insurance, and more. These add about $6,250 to buyers’ expenses on the home purchase for the median home.”

On average, closing costs for buyers in the U.S. range from 2.5% to 5% of the purchase price. Borrowers with limited funds in the bank could potentially reduce their upfront costs by comparison shopping among lenders, skipping the discount points, and asking the seller to make a concession.

Home-Price Appreciation Forecasts for the 35 Largest U.S. Metro Areas

Home price metaphor

Home values in most U.S. cities have risen steadily for the last few years, and a recent home-price forecast suggests this trend could continue into 2019.

A team of housing analysts and economists from Zillow recently published a home-price appreciation forecast for the 35 largest metro areas in the U.S. House values are expected to rise in these and most other parts of the country over the coming months.

According to an August 2018 news release from the company: “Home value growth is slowing in almost half of the 35 largest U.S. metros, with Sacramento and Seattle reporting the greatest slowdown since the beginning of the year.”

Despite this slowdown, they’ve also issued positive home-price appreciation forecasts for 34 out of the 35 metro areas in the report. In other words, house values aren’t rising as fast as they did over the last couple of years — but they’re still climbing.

Home Price Forecasts Into Summer 2019

The table below shows the 12-month home price outlook for the 35 largest housing markets in the U.S.

Metropolitan Area Home Value Forecast for Next Year*
Atlanta, GA 6.90%
Austin, TX 2.80%
Baltimore, MD 4.80%
Boston, MA 8.10%
Charlotte, NC 3.30%
Chicago, IL 7.10%
Cincinnati, OH 5.40%
Cleveland, OH 3.10%
Columbus, OH 5.40%
Dallas-Fort Worth, TX 7.80%
Denver, CO 5.10%
Detroit, MI 9.00%
Houston, TX 1.50%
Indianapolis, IN -1.30%
Kansas City, MO 3.10%
Las Vegas, NV 8.00%
Los Angeles-Long Beach-Anaheim, CA 12.10%
Miami-Fort Lauderdale, FL 5.40%
Minneapolis-St Paul, MN 6.10%
New York, NY 6.80%
Orlando, FL 6.50%
Philadelphia, PA 6.60%
Phoenix, AZ 3.70%
Pittsburgh, PA 4.60%
Portland, OR 2.70%
Riverside, CA 1.70%
Sacramento, CA 4.90%
San Antonio, TX 2.70%
San Diego, CA 4.70%
San Francisco, CA 7.50%
San Jose, CA 11.80%
Seattle, WA 7.10%
St. Louis, MO 4.90%
Tampa, FL 7.50%
United States 6.60%
Washington, DC 3.80%

* Note: This home-price appreciation forecast was issued in August 2018. So the percentages shown in the right-hand column represent the company’s forecast for the next 12 months ending in August 2019.

For the most part, Zillow’s economists see house values rising over the coming months. And these 35 metro-area markets give us a pretty good indication of what their outlook is for the nation as a whole. While the amount of projected appreciation varies widely, the overall forecast is that prices will keep climbing into 2019.

Interesting Highlights from This Report

  • The Los Angeles metro area (including Long Beach and Anaheim) received the biggest home-price forecast in this particular report, followed by San Jose. These and other California housing markets are currently experiencing a shortage of inventory relative to demand, which is putting a lot of upward pressure on house values.
  • Out of the 35 metro areas on this list, Indianapolis was the only one with a negative home-price forecast. The company’s analysts expect to see a slight decline in the median home value for that market.
  • Detroit, Michigan also got a strong forecast for house prices. Detroit was hit hard by the recession and suffered a long period of economic decline ending in bankruptcy. Today, however, new efforts are underway to renovate and revitalize neighborhoods, and demand from home buyers is pushing prices north.

Price Reductions More Common in Some Markets

The forecasts shown in the table above were part of a broader report that looked at price cuts in real estate markets across the country.

According to Zillow senior economist Aaron Terrazas, housing markets nationwide are showing early signs of a shift. For the past few years, most markets have favored sellers over buyers due to tight supply and strong demand. But that may be changing, and price cuts are one sign of this shift.

As Terrazas pointed out:

“A rising share of on-market listings are seeing price cuts, though these price cuts are concentrated at the most expensive price-points and primarily in markets that have seen outsized price gains in recent years. It’s far too soon to call this a buyer’s market, home values are still expected to appreciate at double their historic rate over the next 12 months, but the frenetic pace of the housing market over the past few years is starting to return toward a more normal trend.”

Related: A “normal” forecast for house values

The take-home message: Industry forecasts suggest that home prices in most U.S. cities will continue rising through the rest of 2018 and into 2019. But price growth has slowed down, and some real estate markets are shifting away from the classic seller’s market and into more “neutral” territory.

Disclaimer: This article includes numerous predictions and forecasts for home prices across the U.S. Those projections were provided by third-party sources not associated with our company, and were presented here as an educational service to our readers. As a general rule, the Home Buying Institute makes no claims or assertions about future economic conditions.

San Jose Housing Forecast: Above-Average Price Growth into 2019

Neighborhood in San Jose
Housing development in San Jose, CA. Photo by Sean O’Flaherty.

A pair of recent forecasts for the San Jose, California real estate market suggest that the city will continue to experience above-average price growth in 2019. In fact, one forecast predicted that it will be one of the five strongest housing markets in the country, in terms of annual home-price growth.

Strong Forecasts for the San Jose Real Estate Market

At first glance, the San Jose real estate scene seems to defy all reason. We’re talking about a housing market where a quaint but unremarkable ranch-style house with a modest 1,100 square feet recently sold for $1.2 million dollars, after receiving a slew of offers from buyers.

The median home value in San Jose was around $1.1 million as of June 2018, according to Zillow. Most of the properties in this area are now worth more than the peaks reached during the last housing boom. (And how did that turn out again?)

You might think that a real estate market as expensive as San Jose, California might be “topping out” soon, and that home prices would begin to level off in the near future. Think again.

Two recent forecasts for the San Jose real estate market suggest that the city will see some of the biggest home-price gains of any city in the country, between now and summer 2019.

Let’s start with a forecast published by Veros Real Estate Solutions in July 2018. The Santa Ana-based property valuation company analyzed real estate conditions in major metropolitan areas across the country. They then singled out those they felt would experience the highest levels of home-price appreciation between June 2018 and June 2019.

Here are the top five metros for projected price growth during that 12-month period:

  • Seattle-Tacoma-Bellevue, Washington (+11.1%)
  • Olympia, Washington (+9.8%)
  • Bremerton-Silverdale, Washington (+9.8%)
  • San Jose-Sunnyvale-Santa Clara, CA (+9.5%)
  • Carson City, NV (+9.5%)

According to Eric Fox, VP of Statistical and Economic Modeling at Veros:

“The San Jose market remains exceedingly strong with a supply of homes at an extremely low 1.0 months, while its population is continuing to grow steadily. Its unemployment [rate] is an extremely low 2.6%. The Silicon Valley continues to attract workers for high tech jobs, and there isn’t enough housing to fill demand, making this one of the strongest markets in the country.”

The company’s strong forecast for the San Jose housing market is noteworthy by itself. It’s even more mind-blowing when you consider how much home prices in the area have already risen, over the last few years.

According to Zillow, the median home value for San Jose, California rose by a staggering 24% over the last 12 months (as of July 2018). Nationwide, house prices rose by about 7% to 8% during that same one-year period. So we’re talking about a real estate market that has appreciated more than three times the national rate.

And the economists at Zillow recently predicted that prices would climb by another 10% or so over the next year. Chalk up another strong forecast for the San Jose real estate market.

A Seriously Lopsided Supply-and-Demand Situation

This is a supply-and-demand story, and a lopsided one at that.

The supply of homes for sale is chronically low in the San Jose area, and across most of Silicon Valley. In fact, he real estate market in San Jose has had about a one-month supply of homes for sale during the summer of 2018. That’s one of the lowest levels we’ve seen outside of Seattle, and well below what is considered to be a “balanced” real estate market.

And with a strong local economy and plenty of jobs, San Jose will continue to attract new residents, many of whom can actually afford to buy a house in this pricey market. So we have a situation where there is very limited supply and strong demand. This is putting upward pressure on home prices, more so than in most housing markets across the country.

Disclaimer: This article contains predictions and forecasts for the San Jose, California housing market through 2018 and into 2019. These projections and outlooks were provided by third parties not associated with our company. The publishers of this website make no claims or assertions about future economic conditions.

Charlotte Housing Forecast Suggests Slower Price Growth Through 2019

Charlotte, NC aerial photo

A recently published forecast for the Charlotte, North Carolina housing market indicates that home prices could rise more slowly over the coming months than they did over the past year. But competition among buyers remains high due to limited inventory.

Updated Forecast for the Charlotte Real Estate Market

In July 2018 the real estate research team at Zillow predicted that the median home value for Charlotte, North Carolina would rise by 3.2% over the next 12 months. This followed an actual recorded gain of 12.5% over the previous 12 months.

So clearly they expect price growth to slow down through the end of 2018 and into 2019. In this way, Charlotte mirrors many other cities across the country. The general consensus appears to be that price growth will slow down through the second half of 2018 and into 2019, in most cities across the U.S.

Related: A ‘normal’ forecast for home prices

As of June 2018, the median sales price for Charlotte was $243,250, based on data provided by Trulia. The local Realtor association reported similar numbers for June 2018, which also indicated a rising trend. According to the Charlotte Regional Realtor® Association, the median sales price rose 2.8% in June compared to the same month a year earlier, landing at $248,045. This is based on data from the Carolina Multiple Listing Service.

Zillow’s economists also labeled the Charlotte housing market as “very hot,” which means there is a lot of competition among buyers. The current supply-and-demand situation within the local real estate scene makes it more of a seller’s market.

Limited Inventory Driving Competition Among Buyers

So the forecast for Charlotte’s housing market calls for continued home-price gains for the foreseeable future. And inventory has a lot to do with these predictions.

Among the major cities in North Carolina, Charlotte is one of the tightest real estate markets in terms of for-sale inventory. In May 2018, the city had about a 2.2-month supply of homes for sale. In theory, this means it would take 2.2 months to sell off all homes currently for sale if no new inventory came onto the market.

A balanced real estate market has somewhere between 4 to 6 months of supply. So the real estate scene in Charlotte still favors sellers or buyers.

In these constrained inventory conditions, sellers tend to have more market leverage. Buyers, on the other hand, often have to compete fiercely for limited inventory. And all of this puts upward pressure on home prices, which is why the median home value has climbed so much over the last year.

Strong Job Market Boosting Demand for Homes

According to the U.S. Department of Labor, the unemployment rate in Charlotte sank to 3.4% in May 2018. That indicates a strong local job market and a robust economy. The city’s unemployment rate is slightly lower than the statewide average for North Carolina.

A strong job market affects the housing market in Charlotte in a couple of ways:

  • First of all, it attracts new residents who are seeking employment. This contributes to population growth, which in turn can boost demand for housing in both the rental and purchase side.
  • A good job market also puts more people into a position where they can afford to buy a home. After all, employment is one of the first things mortgage lenders look at when reviewing loan applications.

Given the current supply and demand situation in the area, it’s not surprising to see a housing market forecast that calls for additional price gains. But homeowners probably shouldn’t expect to see double-digit gains in 2019, as they did over the last year or so. Price growth in this real estate market is predicted to slow down over the coming months.

Disclaimer: This report includes predictions and forecasts relating to the Charlotte, North Carolina real estate market in 2018 and 2019. These forward-looking statements were offered by third parties not associated with our company. The Home Buying Institute makes no claims or assertions regarding future economic and housing trends.