Key highlights from this report:
- A recent forecast singled out the 10 strongest housing markets in the U.S.
- These real estate markets could survive the coronavirus crisis better than most.
- Home prices could actually continue rising through the pandemic, in these metros.
- Arizona, Idaho and Washington made a strong showing in this particular forecast.
The 10 Strongest Housing Markets Into Spring 2021
Earlier this month, the property valuation company Veros Real Estate Solutions published a housing market forecast that ranked the ten strongest housing markets in the U.S.
Specifically, these are metropolitan-area real estate markets that have the best potential for home-price appreciation over the next year.
While home prices in some U.S. cities could drop over the coming months, the research team at Veros believes those declining markets will be the minority. “For the next 12 months, we expect 10% of all markets to depreciate,” the report stated.
Conversely, that means the company expects home values to either hold steady or continue rising throughout the public health crisis. Or at least through the first quarter of 2021.
Some housing markets could experience steady but slower home-price growth over the next year, despite our current economic woes. According to the Veros real estate market forecast, metro areas in Idaho, Washington and Arizona are expected to show strength over the coming months.
The 10 Strongest Markets Over Next 12 Months
The list below shows the ten metro-area housing markets where home values are expected to increase the most between the first quarter of 2020 and the first quarter of 2021.
|Metro Area||Q1 2020 – Q1 2021|
|Boise City-Nampa, ID||7.6%|
|Idaho Falls, ID||6.3%|
|Sierra Vista, AZ||5.8%|
|Colorado Springs, CO||4.9%|
One of the things these housing markets have in common is a shortage of supply. In recent years, these metros have suffered from a limited supply of homes for sale (relative to the demand from buyers).
As the Veros real estate forecast stated:
“In the strongest markets, the defining factor is the very low housing supply, which forces prices to increase much more rapidly than in other markets.”
Boise and Idaho Falls
It’s no surprise to see Idaho cities appear on a list of strongest housing markets through Q1 2021.
As we’ve reported in the past, cities like Boise and Idaho Falls have seen tremendous population growth over the past few years. This trend has driven housing supply down and prices up, more so than in most other U.S. cities.
According to the latest estimates from the U.S. Census Bureau, Idaho’s population grew by around 14% from 2010 to 2019. The nation as a whole saw population growth of around 6% during that same nine-year period.
So we’re talking about a state (and many cities within that state) that is currently growing faster than average. This increases demand for housing on both the purchase and rental side.
Home prices in those and other Idaho cities have risen steadily and significantly throughout 2019 and 2020. And while price growth will almost certainly slow a bit as the public health crisis drags on, it will likely continue into 2021.
But not everyone shares the optimism shown within the Veros housing market forecast. For example, the housing research team at Zillow recently made the following prediction for Boise:
“Boise home values have gone up 10.3% over the past year and Zillow predicts they will rise 0.4% within the next year.”
For Idaho Falls, Zillow’s researchers predicted an equally modest gain of 0.7% over the next year or so.
Granted, these are just real estate market predictions. They’re the equivalent of an educated guess. That’s why they vary so much from one source to another. So we probably shouldn’t get too wrapped up in the exact numbers being projected here.
The takeaway here is that real estate markets in Idaho could fare better than other U.S. cities over the next year, as a result of having strong demand and short supply.
Spokane and Olympia, Washington
It’s also not surprising to find Spokane, Washington on a list of strongest housing markets for 2020 and 2021.
Home prices in Spokane have gotten a strong boost in recent years from people relocating out of more expensive areas of California and Washington. It’s part of the same migration pattern that has boosted the population of Boise, Idaho.
While Spokane doesn’t have the same level of population growth as places like Boise and Idaho Falls, it has been growing at a steady pace. Housing inventory, meanwhile, remains very tight within the Spokane real estate market. This puts upward pressure on home prices.
A similar supply-and-demand imbalance can be seen in Olympia, Washington. Olympia’s population grew by 12.1% from 2010 to 2018, according to Census Bureau data. Housing supply, meanwhile, remains well below what’s considered to be a “balanced” real estate market.
Demand from home buyers will likely continue to decline in these Washington State housing markets. The same is true for the other cities and metro areas listed in the table above. But they’ll still have an easier time weathering the storm.
Phoenix, Arizona: It’s Different This Time
The Phoenix, Arizona housing market also made the top-ten in Veros’s long-range home-value forecast. The company expects prices in the Phoenix-Mesa-Glendale metro area to continue rising over the next year.
This might come as a surprise to some. After all, Phoenix was one of the metro areas hit hardest during the last housing collapse. But many housing-related factors have changed since then.
The Phoenix area has a lower overall risk of mortgage default today, when compared to the last housing boom and bust. And it’s not overbuilt and overvalued like it was during the early to mid 2000s. In fact, the Phoenix real estate market is currently experiencing a shortage of homes for sale.
Additionally, the metro area has seen significant population growth over the last decade. In the city of Phoenix, population grew by nearly 15% from 2010 to 2018. That’s more than double the national growth rate for that same eight-year period.
Disclaimer: This article contains housing market predictions and forecasts issued by third parties not associated with the publisher. They are the equivalent of an educated guess. The Home Buying Institute (HBI) makes no claims or assertions about future housing conditions.