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.