Seattle Real Estate Market Forecast for 2017: Leading the Pack, Again?

Back in February, I wrote about Zillow’s prediction that Seattle, Washington would be one of the hottest housing markets in 2016. Turns out they were right. Seattle has generated a slew of headlines this year, mainly due to the rapidly rising home prices in the area.

Well, here we go again. The city is now expected to be one of the hottest markets in 2017, as well.

Seattle One of the Hottest Housing Markets in 2017?

Economists and housing analysts are beginning to offer predictions for 2017, and the Seattle real estate market is once more standing out from the pack.

Veros Real Estate Solutions, a California-based company that specializes in property valuations and analytics, recently published a real estate market forecast for major metro areas across the U.S. In their view, the Seattle-Tacoma-Bellevue metropolitan area could experience the biggest home-price gains from June 2016 to June 2017 (among metro areas that were analyzed).

According to their report, published on July 11:

“The top forecast markets are showing appreciation in the 10% to 11% range with the Pacific Northwest and Colorado having a lock on 8 of the top 10 … Seattle, Wash. (+11.2%), Portland, Ore. (+11.1%), Denver, Colo. (+9.9%) and other metropolitan areas in these same vicinities appear very strong over the next year.”

This outlook is based on the company’s latest VeroFORECASTSM, a quarterly forecast for the national real estate market that covers the 12-month period ending June 1, 2017.

Home Prices Now Higher Than Ever

In June, house values in Seattle rose to a new all-time high. According to a recent report from ATTOM Data Solutions (the parent company of RealtyTrac), the median home price in Seattle rose to $385,500 in June of this year — the highest it has ever been.

“Home prices in the greater Seattle area continue to appreciate above average rates,” said Matthew Gardner, chief economist at Windermere Real Estate. “This is clearly an indication of not only continued faith in the housing market, but also the buoyancy of the regional economy.”

Population growth has a lot to do with this. Seattle’s bustling job market — and its booming tech industry in particular — are luring the young and upwardly mobile from elsewhere in the country. This increases demand for housing, at a time when supply is limited. Home prices tend to rise under such conditions.

According to a recent article published by Sammamish Mortgage, a Bellevue, Washington-based mortgage company: “Despite a recent uptick in construction activity, there just aren’t enough homes on the market [in Seattle] to satisfy the current level of demand.”

It’s that supply and demand thing again.

Zillow’s Forecast for 2017: Additional Gains

The real estate information company Zillow has offered another prediction for the Seattle housing market in 2017. But it’s a bit more modest than the double-digit price projection made by Veros (above).

In August 2016, the company published this statement on its website: “Seattle home values have gone up 16.7% over the past year and Zillow predicts they will rise 8.1% within the next year.” This is based on the company’s “Zestimate,” an estimate of current market value.

Here’s the bottom line to all of these stats and projections: Seattle, one of the hottest real estate markets in 2016, is expected to continue sizzling in 2017.

Disclaimer: This story contains predictions and forecasts for the Seattle housing market in 2017. Those forward-looking statements were provided by third parties not associated with our company. As a rule, the Home Buying Institute does not make claims or assertions about future housing conditions.

Chicago Housing Market Forecast for 2017: More Appreciation Ahead?

Home prices in the Chicago metro area rose steadily over the last year or so. Additional, yet modest, gains are expected in 2017 as well. This is based on several forecasts and predictions for the Chicago real estate market in 2017.

Current Trends Across the Metro Area

Median home prices and sales activity both increased in June. According to the Illinois Association of Realtors, 13,620 homes were sold in the Chicago metro area this June, which is an increase of 2.1% from the same time last year.

Meanwhile, the median price paid for a home in the Chicago area rose 4.6% in June, compared to last year. The median sales price rose to $242,500 in June 2016. Again, that’s for the entire metro area.

Currently, the Chicago housing market favors sellers over buyers. According to Mike Drews, president of Illinois REALTORS: “Sellers continue to reap the rewards of a summer market where buyers are choosing from a greatly diminished pool of properties.” He added that housing supply is struggling to “keep pace with buyer demand.”

These trends no doubt fuel the Chicago housing market predictions for 2017, some of which call for additional price gains over the next year or so.

Zillow Forecast for Chicago Housing Market, Through July 2017

Zillow has forecast additional home-price gains for the Chicago housing market, between now and the summer of 2017. By their estimation, house values within the city will rise by 1.7% over the next 12 months (roughly, July 2016 – July 2017).

That’s for the city itself. Their one-year forecast for the broader metro area calls for a gain of 2.5%, during the same 12-month time frame. On July 27, 2016, the company issued this statement on its website: “Chicago Metro home values have gone up 3.3% over the past year and Zillow predicts they will rise 2.5% within the next year.”

That’s one positive real estate market forecast for Chicago in 2017. Here’s another that comes out of the University of Illinois:

Short-Range Prediction for Chicago Home Prices

In July 2016, the Illinois Association of Realtors published a short-range housing market forecast for the Chicago metro area, looking out over the next few months. It was based on data and analysis provided by Geoffrey Hewings, director of the Regional Economics Applications Laboratory (REAL) at the University of Illinois.

In the Chicago metro area, median home prices are expected to rise 7.1% in August 2016, compared to the same time last year. In September, prices are expected to be up 5.2% year over year.

The REAL housing price index (HPI) predicts even stronger growth in the coming months. According to the report: “The REAL HPI [for the Chicago metro area] is forecast to rise by 8.2% in July, 10.3% in August and 10.3% in September [2016].”

So we have positive real estate market predictions in both the short and long-term, from two different sources. While no one can predict what the housing market will do with complete accuracy, the general consensus appears to be that Chicago metro-area home prices will continue to rise in 2017, but a modest pace.

Case-Shiller Index: 3.7% Annual Gain in May 2016

According to the latest S&P/Case-Shiller Home Price Index, published on July 26, house values in Chicago rose 3.7% from May 2015 to May 2016. They rose 1.8% from April to May alone.

The fact that the one-month gain from April – May 2016 is nearly half of the annual gain suggests that home-price appreciation accelerated in the spring of this year. That would jive with Zillow’s forecast for the city of Chicago, which calls for larger gains between now and July 2017, compared to the last 12 months.

No matter how you measure it, the Chicago real estate market has experienced home-price appreciation in recent months. And the trend is expected to continue, to some degree, through the end of this year and into 2017.

Freddie Mac Outlook: Mortgage Rates Rising in 2017

Mortgage rates are also expected to rise in 2017. That’s the latest forecast offered by the economists at Freddie Mac, the government-controlled buyer of mortgage loans.

Here is their forecast for 30-year loan rates between now and the end of 2017. These are the average rates they expect to see during each quarter.

  • Q2, 2016: 3.9%
  • Q3, 2016: 4.2%
  • Q4, 2016: 4.4%
  • Q1, 2017: 4.5%
  • Q2, 2017: 4.7%
  • Q3, 2017: 4.9%
  • Q4, 2017: 5.1%

As shown here, the economists at Freddie Mac feel that 30-year mortgage rates will rise steadily later this year and into 2017.

When this article was published, in July 2016, the average rate for a 30-year mortgage was 3.48%, according to the Freddie Mac weekly market survey.

Granted, this outlook is the equivalent of an educated guess. So you probably shouldn’t “bank” on it. The key takeaway here is that the company’s economists expect rates to rise gradually over the coming months.

Disclaimer: This article includes forward-looking statements (forecasts and predictions) relating to the Chicago real estate market. Such statements were provided by third-party sources not associated with our company. As a general rule, the Home Buying Institute does not make assertions or guarantees about future housing conditions.

Denver Real Estate Market One of 10 Most Stable in U.S. in 2016

The Denver, Colorado real estate market is currently one of the most stable in the nation, according to a recent ranking by SmartAsset. Boulder and Fort Collins were ranked #1 and #6, respectively.

We’ve written about the Denver housing market a lot in 2016, mainly for its inclusion in top-10 lists. For instance, back in February, the real estate information company Zillow included the Mile-High City in a list of the top 10 housing markets to watch in 2016. Denver has appeared in similar lists measuring home-price gains.

Denver Real Estate Market Among the Most Stable in U.S.

And now, here comes another top-10 list featuring the Denver real estate market. In June, the New York City-based personal finance company SmartAsset created a list of the ten best housing markets for growth and stability.

To create its list, the company “relied on two factors: the overall home price growth rate since 1991 (our growth factor) and the average odds that a homeowner in a particular market would have experienced significant price declines within the decade after buying a home (our stability factor).”

In other words, they looked backward as well as forward — as much as possible without a crystal ball, anyway. Based on their analysis, the Denver housing market was ranked as one of the most stable in the nation in 2016, and poised for continued growth.

Boulder, Colorado also made the list, appearing at #1. Fort Collins appeared at #6.

Here are the ten most stable housing markets, according to SmartAsset:

  1. Boulder, Colorado
  2. Austin-Round, Rock Texas
  3. Casper, Wyoming
  4. Bismarck, North Dakota
  5. Midland, Texas
  6. Fort Collins, Colorado
  7. Billings, Montana
  8. Missoula, Montana
  9. Denver-Aurora-Lakewood, Colorado
  10. Grand Forks, North Dakota

But Denver has had its share of ups and downs, where home prices are concerned. As the authors of the SmartAsset study pointed out: “While there has been a 270% total growth rate since 1991, the Denver-Aurora-Lakewood housing market … has seen home prices drop significantly at times during that period.”

Strong Housing Demand Lifting Home Prices

In recent years, home prices have risen steadily in the Denver real estate market. According to Zillow, the home value index for the city rose by around 10% over the last year or so, and the company’s 12-month forecast calls for another 5% growth.

Home prices tend to rise whenever there’s strong demand for housing, especially when inventory is limited by comparison. That’s exactly what we are seeing in the Mile-High City. A recent report by CoreLogic showed that the median sales price for houses and condos in the Denver real estate market rose 10.3% in May 2016, compared to the same time last year. That was the highest year-over-year increase among the nation’s largest cities, according to CoreLogic.

Population growth has a lot to do with these steady home-price gains. A lot of folks want to live in the Denver area, but there’s only so much real estate to go around (especially close to the city’s core). This creates a supply-and-demand imbalance and pushes home prices north.

According to a recent analysis by the U.S. Census Bureau, Colorado is the second-fastest growing state in the country, for population. And Denver is one of the ten fastest growing metro areas in the U.S., according to Forbes. (Chalk up another top-10 ranking.)

And what’s not to love about the Mile-High City. It has jobs, natural beauty, plenty of outdoor activities and nightlife, and recreational marijuana. No wonder it’s a mecca for the young and upwardly mobile.

Disclaimer: This story includes third-party data and assessments that are deemed reliable but not guaranteed. As a general rule, the Home Buying Institute does not make predictions or forecasts relating to the real estate market.

Austin, Texas Housing Market Named Second Most Stable in the U.S.

According to a recent analysis by the finance website SmartAsset, Austin, Texas is the second most stable housing market in the United States. Boulder, Colorado was ranked first. Home prices in Austin have risen more or less steadily for many years, while avoiding the extremes of other real estate markets across the country.

Austin Housing Market #2 in the Nation for Stability

This isn’t particularly surprising, when you look at the history of this housing market. Like most metro areas in Texas, the real estate scene in Austin was relatively stable during the housing crisis that began around 2008. Home values in the area dipped slightly during those years, but it was nothing like the price plummet seen elsewhere across the country.

But what is a “stable” real estate market exactly? According to SmartAsset, these are cities and metro areas with a steady upward trend in home prices and (perhaps more importantly) a low probability of depreciation in the near future.

As the company explained on its website:

“In order to complete our analysis, we relied on two factors: the overall home price growth rate since 1991 (our growth factor) and the average odds that a homeowner in a particular market would have experienced significant price declines within the decade after buying a home (our stability factor). In order for a price decline to be significant, home prices in any quarter within 10 years had to fall by at least 5% relative to the original home price.”

Since 1991, home prices in Austin’s housing market have risen by a whopping 271%, according to the study. More to the point, homeowners haven’t suffered any major price declines in that time.

Boulder, Colorado topped the list with the most stable growth over the past 25 years. House values in that city have risen more than 300% since 1991, again without any major declines.

Here’s a complete list of the top-ten most stable housing markets:

  1. Boulder, Colorado
  2. Austin-Round, Rock Texas
  3. Casper, Wyoming
  4. Bismarck, North Dakota
  5. Midland, Texas
  6. Fort Collins, Colorado
  7. Billings, Montana
  8. Missoula, Montana
  9. Denver-Aurora-Lakewood, Colorado
  10. Grand Forks, North Dakota

Supply and Demand Driving Home-Price Growth

You might have noticed a common trend in this list, in terms of geography. These cities are mostly located in the Midwest, while the east and west coasts are not represented at all. That’s no coincidence, but rather a direct result of supply and demand.

According to Daren Blomquist, the vice president of RealtyTrac: “In the middle-America markets there is more room to create more supply than in the coastal markets, which are often constrained geographically as well as by more regulation.”

As the report’s authors pointed out, strong demand continues to drive price growth in the Austin real estate market. The city has much to offer young people in particular, which helps fuel the local housing market. Austin has been ranked as one of the best cities for college graduates, partly due to the strong job market and vibrant nightlife. This brings more upwardly mobile residents into the market, boosting demand for homes.

But housing supply is not as constrained in Austin, as it is in places like San Francisco and New York City. There’s plenty of room to build around the city, and land is relatively cheap (especially when you get further out from downtown). So while housing demand continues to lift home prices in Austin, it does so at a more sustainable pace than many metro areas.

Disclaimer: This story includes third-party data and assessments that are deemed reliable but not guarantee. As a general rule, the Home Buying Institute does not make predictions or forecasts relating to the real estate market.

Forecast for San Diego Housing Market: Strong Gains Through 2020?

How’s this for a favorable forecast? The San Diego housing market could experience steady home-price appreciation from 2016 to 2020, with prices rising by around 3% – 6% annually for each of those years.

That’s the general consensus among the housing economists at Moody’s Analytics. They recently gave MONEY magazine (part of Time) their home-price forecasts through 2020, for 20 of the biggest metro areas in the United States.

The San Diego real estate market was included in the report. And while home prices in the area might not rise as much as they have in recent years, the company’s economists are still calling for steady gains through 2020. And that’s not surprising when you look at the current supply and demand situation.

Read: San Diego a “market to watch” in 2016

Home Price Forecast for San Diego Housing Market

The bar chart below shows the Moody’s Analytics home price predictions for San Diego’s housing market, over the next five years. As you can see, local house values are predicted to continue rising through 2020 (and possibly beyond that, though the team didn’t forecast that far).

san-diego-forecast
San Diego home price forecast. Source: Time.com.

This puts the San Diego real estate market on a short list of metro areas that are expected to outperform national housing trends over the coming years.

Homeowners across the metro area have enjoyed steady appreciation over the last couple of years, and it’s a trend that could continue for the foreseeable future.

Many home buyers, on the other hand, are being squeezed out of the real estate market by ever-rising house values. The housing affordability issue in San Diego has been well documented, and it could worsen over the coming years as home price appreciation outpaces income growth.

Inventory Shortage Driving Appreciation

Inventory has a lot to do with the recent rise in San Diego home prices, and the positive pricing forecast through 2020. There just aren’t enough homes for sale to meet the current level of demand, and it’s lifting house values across the metro area.

In January 2016, San Diego experienced the biggest drop in homes for sale, in the entire nation. This is according to a recent report by Zillow, the real estate information company. The San Diego housing market had a 30.2% decline in housing inventory (including both new and existing homes, as well as condos) during the 12-month period from January 2015 to January 2016. That was the largest decrease in the country, followed by Charlotte, N.C. at 27.1%.

It’s no coincidence that home prices rose steadily during that period as well. According to the most recent S&P/Case-Shiller Home Price Index (published on March 29, 2016), house values in the San Diego metro-area housing market rose 6.9% from January 2015 – January 2016. That was higher than the national average for the same period, and a direct result of the inventory reduction mentioned above.

According to Aaron Terrazas, a senior economist at Zillow, the inventory shortage in San Diego’s real estate market is partly the result of homeowners who are reluctant to sell:

“People in these expensive places who own homes are a little bit reluctant to go out and search for a new home,” he said. “They’re worried they won’t find anything comparable to what they have.”

It’s a valid concern, and it’s keeping a lot of would-be sellers off the market for now.

Disclaimer: This story contains long-range home price and housing market forecasts for the San Diego metro area. Such forward-looking statements were provided by third parties not associated with this website. As a matter of policy, the Home Buying Institute makes no predictions or claims about future real estate conditions. We merely gather and report the forecasts made by other expert sources, as a service to our readers.

California Real Estate Markets Dominate Realtor.com ‘Hot’ List, Again

Last week, Realtor.com updated its list of the 20 hottest housing markets in the U.S. This popular, recurring series looks at housing conditions in medium to large metropolitan areas across the country, and then ranks the hottest markets based on local supply and demand factors.

California once again dominated the company’s hot list. Twelve of the 20 hottest housing markets for February are located in the Golden State. The top-10 list has an even higher percentage, with a total of eight California housing markets making the cut (80%). Again, this is among medium to large metro areas.

This coincides with a November 2015 forecast, which predicted that most of the hottest markets of 2016 would be located in California. As it was predicted, so it has become.

12 California Housing Markets Ranked Among “Hottest”

Here are the top 20 hottest housing markets for February, by Realtor.com’s estimation:

  1. San Francisco, CA
  2. San Jose, CA
  3. Dallas, TX
  4. Denver, CO
  5. Vallejo, CA
  6. San Diego, CA
  7. Santa Cruz, CA
  8. Santa Rosa, CA
  9. Stockton, CA
  10. Oxnard, CA
  11. Sacramento, CA
  12. Los Angeles, CA
  13. Boulder, CO
  14. Modesto, CA
  15. Eureka, CA
  16. Portland, OR
  17. Nashville, TN
  18. Colorado Springs, CO
  19. Palm Bay, FL
  20. Tampa, FL

Methodology for Measuring the Hot Factor

The economic team at Realtor.com created this list by determining which U.S. housing markets had the best availability (good for home buyers) along with the highest level of demand (good for sellers).

To measure housing demand, they looked at the total number of real estate listing views for each metro area, on the Realtor.com website. To measure supply, they used the median number of days on market, primarily. This led to the creation of the hottest housing markets list, a list that gets updated each month as local market conditions change.

In the California (and other) housing markets shown above, real estate listings are viewed two to five times more often than the national average, according to a company representative. Homes are currently selling faster in these hot markets as well — as much as 78 days faster than the national average. This is often the result of limited inventory, which forces buyers to compete fiercely with one another for available homes.

San Francisco Still #1, With San Jose Rising

There are some familiar names on this list. For instance, the San Francisco, California housing market has been ranked #1 on the hot list for four months in a row. San Jose has been climbing steadily through the rankings and could eventually take the top spot, partly a result of tech money and demand in the Silicon Valley real estate market.

“These are the places that are head and shoulders hotter than the rest of the country,” said Jonathan Smoke, chief economist at Realtor.com, “and they’re also accelerating.”

Texas Housing Markets Ideal for Investors in 2016, According to Forbes

According to a recent report, Texas has some of the best residential real estate markets for investors. This is based on an analysis of the 100 largest metro areas in the country. Housing markets in Austin, Dallas and San Antonio were all ranked within the top 10, as far as best places to invest in a home.

The analysis was conducted by Forbes, with help from Local Market Monitor, a North Carolina-based company that monitors home prices and other economic conditions across the country. Florida cities also fared well in the rankings. Cape Coral, Fort Lauderdale and Orlando made the top ten.

Austin, Dallas, San Antonio: “Best Buy” Housing Markets

Home prices rose steadily in 2015, all across the United States, and more gains are expected in 2016. In fact, house values have risen faster than job wages, and that has created affordability problems for buyers in some parts of the country.

But for real estate investors seeking to purchase rental properties, opportunities abound — especially in the 10 housing markets listed below.

To find out which cities were poised to give investors a solid return, Local Market Monitor analyzed the 100 largest metropolitan statistical areas in the U.S. (all with populations of 600,000 or higher). They then identified housing markets with favorable conditions for investors and “regular” home buyers alike. These markets all have healthy job growth, population growth, and anticipated home price appreciation.

The result was a top-20 list of “Best Buy Cities” for 2016. An abbreviated top-10 version is shown below.

Top 10 “best buy” housing markets for investors, with average home price:

  1. Grand Rapids, MI – $154,348
  2. Orlando, FL – $202,809
  3. San Antonio, TX – $200,522
  4. Charlotte, NC – $220,758
  5. Salt Lake City, UT – $258,371
  6. Dallas, TX – $211,245
  7. Austin, TX – $281,355
  8. Fort Lauderdale, FL – $258,577
  9. Seattle, WA – $370,306
  10. Cape Coral, FL – $211,531

As you can see, three of the top 10 real estate markets for investment are located within Texas — Austin, Dallas and San Antonio. According to the Forbes article that announced the results:

“… these three Texas metros are doing well overall thanks to their diversified economies … Austin is welcoming growth in high tech. Dallas is welcoming the relocation of Toyota, State Farm Insurance, and Liberty Mutual Insurance. San Antonio has financial firms and data centers.”

The three Texas cities listed above all have strong job markets that attract people from other parts of the state, and from elsewhere in the country. This puts more home buyers into the market and increases demand for housing, at a time when there’s a supply shortage. This is why home prices have risen so fast in the Austin, Dallas and San Antonio housing markets.

Related: Dallas one of the hottest markets in 2016

Home Prices Climbing in Texas Metros

According to Zillow, home prices in Austin and Dallas rose by double digits last year. Additional, but more modest, gains are expected in 2016. This is partly due to the supply-and-demand imbalance mentioned earlier. In short, there aren’t enough homes for sale in these real estate markets to satisfy demand.

Local Market Monitor expects prices in these housing markets to continue climbing over the next few years. Their three-year home price growth projections for Austin, Dallas and San Antonio are all above 25%. The authors explained that “there continues to be a shortage of housing supply, meaning prices are likely to keep on rising.”

Home Prices Rose in 91% of Housing Markets Last Year, According to RealtyTrac

Earlier this month, the real estate data firm RealtyTrac published its “Year-End 2015 U.S. Home Sales Report.” The report revealed that most local housing markets in the U.S. have experienced price gains within the last year — some in the double digits.

According to the company, 91% of the markets analyzed experienced a year-over-year increase in median home prices during 2015.

The report also showed that home sellers in the U.S. enjoyed an average price gain of 11% since purchasing their homes. That was the largest average price gain for sellers since 2007, marking an eight-year high.

91% of Housing Markets See Year-Over-Year Price Gains

At the end of 2015, the median house price in the United States was $206,500. That was 10% higher than the same time in the previous year, the result of steady appreciation in the housing market. Furthermore, December 2015 marked 46 consecutive months of year-over-year gains in the nation’s median home price.

This is further evidence that the country has left the housing crisis far behind, and is now appreciating steadily.

In its latest assessment, RealtyTrac analyzed 87 major metropolitan areas across the United States. Seventy-nine of those metro-sized housing markets (or 91%) had experienced a year-over-year increase in median home prices by the end of 2015. House values in other cities surrounding the 87 metros likely rose as well, due to the “halo” effect of real estate market appreciation.

Biggest Winners: St. Louis, Raleigh, Detroit and Tampa

RealtyTrac also analyzed the 46 largest housing markets in the U.S. (with populations of 1 million or more) to see where the biggest annual home-price gains occurred. St. Louis, Missouri experienced the biggest increase in 2015, with a whopping 19% rise in its median home price.

The Raleigh, North Carolina housing market posted a gain of 17%, as did Detroit, Michigan. The median home price in Tampa, Florida rose by 15% last year, according to RealtyTrac’s analysis. Denver; Seattle; San Jose and Providence, Rhode Island all had double-digit gains of 13%.

(On a side note, Denver and Seattle were recently named two of the hottest markets to watch in 2016. So it’s no surprise to find them singled out in the RealtyTrac report.)

Other highlights from the February 2016 report:

  • 38% of the 87 metro-area housing markets analyzed have reached new all-time highs. (Related story: New price peaks seen in Boston, Dallas, Denver and Portland)
  • Home sales volume reached a nine-year high at the end of last year.
  • Distressed (foreclosure) sales and short sales fell to an eight-year low in December, signaling a healthier housing market.
  • All-cash home sales fell to a seven-year low at the end of last year, as investors pull back from the market.
  • FHA loans have become increasingly popular among home buyers. FHA market share rose to a four-year high in December, according to several sources.

Are Home Prices Cooling in 2016?

It’s easier to analyze the past than predict the future. So it’s hard to say exactly what the U.S. housing market will do through the rest of 2016. But the general consensus among analysts and economists is that home prices in many U.S. cities could rise at a slower pace in 2016, or flat-line completely.

In fact, we’re seeing a general cooling trend in many major cities already, particularly those that experienced larger-than-average home price gains over the last year (such as San Francisco).

According to the real estate firm Zillow, the U.S. median home value rose 4.0% over the past year. The company predicts a more modest gain of 2.6% within the next year. This forecast was issued in February 2016.

Three Florida Housing Markets That Look Good for Investors

According to a new report, Florida housing markets in Orlando, Fort Lauderdale, and Cape Coral offer ideal conditions to real estate investors in 2016. Those three cities recently appeared in a top-ten list of best markets for investors.

The list was compiled by Forbes with help from Local Market Monitor, a North Carolina company that tracks house values and economic conditions across the country. Texas cities were also prominent in the rankings. Austin, Dallas and San Antonio appeared within the top ten.

Is 2016 a Good Year for Real Estate Investors?

Home prices are still rising in most U.S. cities, as they did through most of last year. That might seem like a good thing. The problem, however, is that house values are rising faster than wages in many cities. By comparison, wages have remained relatively flat over the past months.

Read: 7 positive trends in the housing market

This creates affordability problems for the average home buyer in 2016, especially those in the lower and middle income brackets.

But 2016 could be a good year for real estate investors, particularly in housing markets like Orlando, Cape Coral and Fort Lauderdale (to name but a few). In such markets, economic conditions favor investors who want to put their money into rental properties.

Homes in these markets can be purchased for a good price and turned into an income stream, and possibly resold down the road for a higher price.

Many of the housing markets that made the top 20 are still considered undervalued. Most of the cities on the list had a combination strong population growth, job market stability, and expected home-price appreciation in 2016. These are considered to be ideal conditions for real estate investors, according to the report.

Cape Coral, Fort Lauderdale and Orlando Housing Markets Look Good for Buyers

To find out which housing markets offered investors and home buyers the best bang for the buck, Forbes and Local Market Monitor examined the 100 biggest metro areas in the U.S. (all with populations of 600,000 or higher). They zeroed in on markets with favorable characteristics for real estate investors and “regular” home buyers. The result was a top-20 list of “2016 Best Buy Cities.”

The full top-20 list is available on the Forbes website. An abbreviated top-10 version is shown below.

Top 10 “best buy” cities for investors, shown with average home price:

  1. Grand Rapids, MI — $154,348
  2. Orlando, FL — $202,809
  3. San Antonio, TX — $200,522
  4. Charlotte, NC — $220,758
  5. Salt Lake City, UT — $258,371
  6. Dallas, TX — $211,245
  7. Austin, TX — $281,355
  8. Fort Lauderdale, FL — $258,577
  9. Seattle, WA — $370,306
  10. Cape Coral, FL — $211,531

As you can see, three of the 10 “best buy” housing markets for investors are located in Florida — Cape Coral, Fort Lauderdale and Orlando. All told, there was a total of seven Florida cities within the top 20.

Will Fort Lauderdale Home Prices Drop in 2016?

As mentioned earlier, home prices are expected to continue rising in most of the housing markets on the Forbes / Local Market Monitor list. But there were exceptions as well.

According to the economists and housing analysts at Zillow, home prices are expected to rise in only two of the three Florida cities in the top-10 list above. The company’s 12-month forecast calls for rising house values in Cape Coral and Orlando, during 2016. In contrast, prices in Fort Lauderdale are expected to drop slightly over the next 12 months.

Here is Zillow’s 1-year forecast for all three housing markets, as of February 2016:

City 1-year change 1-year forecast
Cape Coral +11% +3.7%
Fort Lauderdale +6.2% -1.8%
Orlando +11.6% +4.2%

Granted, these forecasts are the equivalent of an educated guess. But it’s a well-educated guess made by some of the most data-savvy analysts within the real estate industry. So it’s certainly worth considering, if you’re a real estate investor or home buyer.

Disclaimer: This story contains research, opinions and forecasts from third parties that are not associated with the Home Buying Institute. The publishers of this website make no claims or assertions regarding future conditions within the housing market.

Denver, Seattle and Dallas Hottest Housing Markets for 2016, Says Zillow

According to a recent report by the real estate information company Zillow, Dallas, Denver and Seattle are the three hottest housing markets to watch in 2016. Home prices in these three cities — all of which are considered “tech towns” — are expected to rise steadily in 2016.

Of course, this should come as no surprise to anyone who follows real estate headlines (or HBI’s news blog). We’ve been reporting on these red-hot housing markets for months now. For instance, our readers might recall that home prices in Dallas and Denver returned to pre-housing-crisis peaks way back in 2013, and have been rising steadily since then.

Zillow’s Hot List: 10 Markets to Watch in 2016

To determine which housing markets would be sizzling in 2016, Zillow’s economic team examined home price trends, job market strength, and income growth among local residents. They then created a list of the top ten housing markets to watch in 2016, based on the above factors.

Zillow’s Top 10 Housing Markets for 2016:

  1. Denver, Colo.
  2. Seattle, Wash.
  3. Dallas-Fort Worth, Texas
  4. Richmond, Va.
  5. Boise, Idaho
  6. Ogden, Utah
  7. Salt Lake City, Utah
  8. Omaha, Neb.
  9. Sacramento, Calif.
  10. Portland, Ore.

So why have Denver, Seattle and Dallas-Forth Worth appeared on so many of these “hot lists” lately? What makes them the darlings of housing analysts and economists? Here’s an in-depth look at current and past real estate trends in these hot markets.

Denver: Mile-High City With Home Prices to Match?

Home prices in the Denver metro area skyrocketed in 2015, and they’re still following an upward trajectory. According to the latest release of the S&P/Case-Shiller Home Price Index (published on January 26, 2016), house values in Denver have hit yet another all-time high. That means house values have never been higher than they are right now. Prices in the Mile-High City rose by double digits over the last year or so.

Inventory is tight in the Denver real estate market. There simply aren’t enough homes listed for sale to meet demand, and this imbalance will likely push home prices even higher in 2016. A lot of folks are moving to this metro area from other states, but residential construction hasn’t kept pace. As a result, the Denver housing market could be a hot spot for appreciation in 2016.

Seattle Another Housing Market to Watch in 2016

Last fall, Seattle was ranked #4 on the Urban Land Institute’s list of markets to watch in 2016. And the city now appears on a similar list created by Zillow. So why is everyone clamoring about the Seattle housing market in 2016? What makes it such a frequent entrant on these lists? Once again, inventory is a major factor.

According to Realtor.com, the number of homes listed for sale in Seattle has declined by 30% over the last year or so. Meanwhile, the city’s population is growing steadily. In 2014, Seattle was the fastest-growing city in America by Census Bureau estimates. They’re coming for jobs, in many cases. After all, the city boasts an unemployment rate well below the national average.

It’s that supply-and-demand thing again. There are plenty of home buyers in the market to buy a home, but not enough homes available. This will make Seattle one of the hottest housing markets in 2016, by Zillow’s estimate.

Dallas Cooling Down, But Still Hot

What can we say about the Dallas real estate market we haven’t said before (like a month ago)? It’s another one of those metro areas with low unemployment and a high influx of workers. Translation: The “Big D” is getting bigger. But, once again, there aren’t enough homes on the market to meet demand.

Home price appreciation in Dallas could slow down a bit in 2016. Zillow predicts a gain of 5.6% over the next 12 months, compared to a whopping 16% over the last 12 months. So a market cool-down could be on the horizon. But 5.6% is still well above the national forecast for year-over-year price growth, and that makes Dallas another hot housing market to watch in 2016.