Highlights from this report:
- Home-price appreciation is slowing down in cities across the U.S.
- Prices have even started to drop in some areas, like Seattle and Silicon Valley.
- But some housing markets are still humming right along with steady gains.
- Charlotte, NC; Indianapolis, IN; and Jacksonville, FL are all doing well right now.
We recently analyzed home-price data provided by Zillow for the 50 largest metropolitan areas in the U.S. As you might have guessed, it’s a mixed bag. As of summer 2019, prices are starting to slow down, or even decline, in some housing markets across the country.
But there are still plenty of local real estate markets where home prices are rising steadily — and are expected to continue climbing for the foreseeable future.
We looked for metro-area housing markets that appear to be outperforming the national average, in terms of home-price gains and forecasts. Three housing markets stood out right away:
- Charlotte, North Carolina
- Indianapolis, Indiana
- Jacksonville, Florida
These three real estate markets have a couple of things in common. Home prices in all three of these metro areas rose faster than the national average over the past year or so.
Charlotte, Indianapolis and Jacksonville also received relatively strong home-price forecasts extending into 2020. Zillow’s research team predicts that house values in these housing markets will rise more than the national average over the next 12 months.
Here’s a closer look at these three metro areas:
Charlotte, NC: Home Prices Rising at Above-Average Pace
According to Zillow, home prices in Charlotte rose by around 7% over the past year or so (as of August 2019). That was more than the 5.2% gain recorded for the nation as a whole.
The company’s home-price forecast for the Charlotte real estate market predicts that property values will continue to climb well into 2020. In early August 2019, they wrote: “Charlotte home values have gone up 6.7% over the past year and Zillow predicts they will rise 3.2% within the next year.”
This city also has some of the most successful home buyers in the country, when it comes to “first-offer success rate.”
Inventory remains tight within the Charlotte-area housing market. According to the national real estate brokerage Redfin, the metro area had less than a three-month supply of homes for sale in summer 2019. That’s well below the five- to six-month supply that’s considered to be a “balanced” real estate market.
The good news is that supply levels appear to be rising gradually across the Charlotte area. According to Zillow, housing inventory in the area rose by 3.9% over the past year. This bodes well for home buyers. It gives them more properties to choose from, while easing competition at the same time.
Bottom line: The current supply-and-demand situation in the Charlotte real estate market will probably keep home prices moving north for the foreseeable future. That seems to be the general consensus among housing analysts.
Indianapolis, IN: Low Housing Supply Increases Competition
According to a July 2019 Forbes article, the Indianapolis real estate market is currently a “hot spot” for demand among investors. The article was entitled, “Where To Invest In Housing Halfway Through 2019.” According to author (and real estate analyst) Ingo Winzer:
“These markets had the largest increase in home prices in the past year. Some of them may soon be over-priced, but right now they’re hot-spots of demand, with prices up 8% to 13% in the past year. These markets include Las Vegas, Ogden, Colorado Springs, Charlotte, Raleigh, Grand Rapids, Jacksonville, Nashville, Tucson, Indianapolis and Atlanta.”Source: Forbes.com. July 12, 2019.
Real estate investors like this metro area because it is still relatively affordable, which means prices have room to rise further.
Home purchases from professional investors and “regular” buyers alike have driven inventory levels down over the past few years. As of July 2019, Indianapolis had less than a two-month supply of homes listed for sale. That was one of the lowest levels of supply we have seen, among the nation’s major metropolitan areas.
The tight inventory situation has made things challenging for home buyers in Indianapolis. It increases competition for limited supply. It also puts upward pressure on prices. So it’s no surprise to see this housing market posting above-average gains and forecasts, in terms of house values.
In August, the team at Zillow wrote: “Indianapolis home values have gone up 10.5% over the past year and Zillow predicts they will rise 4.6% within the next year.”
So here again, we have a real estate market that has posted above-average price increases over the past year. This housing market is expected to outperform the national average over the next 12 months as well (though prices are predicted to rise more slowly).
Jacksonville, FL: Prices Predicted to Continue Climbing
Jacksonville, Florida is another housing market where strong demand and limited supply are boosting home prices. You’ll notice that it too was mentioned in the quote above, as being a “hot spot” of demand among real estate investors.
Over the past year, home prices in Jacksonville rose a bit faster than the national average. At least one forecast predicts they will continue to climb well into 2020, thought at a slower pace.
In August, Zillow wrote: “Jacksonville home values have gone up 6.4% over the past year and Zillow predicts they will rise 3.1% within the next year.”
Granted, that’s not a huge forecast for the next 12 months. It’s fairly “normal” by historical standards. But at a time when prices are leveling off in some housing markets across the country, such a forecast is noteworthy and suggests that the Jacksonville housing market is still doing well.
Low Mortgage Rates Give Housing Market a Boost in 2019
Home buyers in these and other housing markets across the country are currently benefitting from the lowest mortgage rates we’ve seen in years.
Earlier today, the government-sponsored mortgage buyer Freddie Mac reported that the average rate for a 30-year fixed mortgage dropped to just 3.6%. That’s the lowest they’ve been since November 2016.
The chart below shows the average rate for a 30-year fixed mortgage over the past year or so. As you can see, it has mostly been a downward slide.
We expect to see an increase in mortgage applications over the coming weeks, as home buyers rush to take advantage of this low-rate environment.
Disclaimer: This article contains housing market and home price forecasts issued by third parties not associated with the Home Buying Institute. We have gathered them here as an educational service to our readers. Economic forecasts are the equivalent of an educated guess and should be treated as such.