US property website Zillow has named what it expects to be the top ten property hotspots in the USA during 2018.
Over half (52.6 per cent) of all US property is now worth as much or more than they were at the peak of the market in April 2007 before the global financial crash according to Zillow, and the boom in US property values is expected to continue.
However, some property markets are proving hotter than others, due to healthy income growth, abundant job opportunities and above-average housing appreciation, and Zillow has named what areas it expects to lead the way.
San Jose in California tops the list of hottest markets for 2018. Home values in the Silicon Valley hub gained 17.4 per cent over the past year – the fastest growth among the 50 largest metro areas – and it tops Zillow’s list of hot markets for 2018, as high-paying tech jobs continue to keep pace with climbing housing costs.
San Jose’s median home value of $1.13 million is expected to grow by 8.9 per cent this year, while its population and labour market remain robust. Glassdoor estimates that San Jose has 0.036 job openings per person – the highest rate among large U.S. metros. It’s also the only market with a median household income above $100,000 – at $110,040.
The west coast dominates the top ten, with technology hubs Seattle and San Francisco coming in at numbers 3 and 5 respectively, whilst Portland also sneaks into the top ten at number 9.
Two east coast locations help make up the top five however, with Raleigh and Charlotte, both in North Carolina taking places 2 and 4 in the Zillow property hotspot list.
The top 10 also includes Nashville, Denver and Austin – which have the lowest unemployment rates among large metros, even as Austin’s population grows faster than other major metros (at 2.8 per cent between 2015 and 2016).
Finally, Austin’s Texas neighbour Dallas rounds off the Zillow list at number ten.
Overseas property investors need to choose their area carefully in the US however, as Zillow are not as optimistic on other areas.
Housing markets that will continue to face challenges in 2018 include former industrial giants Cleveland, Buffalo, N.Y. and Milwaukee. The population of all three metros is falling, and unemployment in Cleveland is 6.2 per cent, well above the historically low national rate of 4.1 per cent.
Zillow also anticipates cooler fortunes for housing in Hartford, Connecticut., where the median home value is expected to gain 1.2 per cent this year – in an area where only 5.7 per cent of homes are at or above their property value peak.
In compiling the list, Zillow scaled six variables for the 50 largest US metros and combined them to form an overall score. Here are the variables:
- Zillow’s Home Value and Rent Forecast, which forecasts the change in the Zillow Home Value Index (median home values) and Zillow Rent Index (median estimated rents) over the next 12 months
- Income and population growth using ACS 2015 and 2016 one-year estimates.
- Current unemployment rates using Moody’s Analytics estimates from the Bureau of Labour Statistics’ Local Area Unemployment Statistics.
- Number of job openings per person using data from Glassdoor.
Overseas property investors interested in the USA may want to consider the research.