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The New Boomtowns
Dated: July 3 2019
The big news in the world of real estate: After years of home prices going up and up and up—rising well out of the reach of many eager wannabe buyers—the market has finally begun to soften. That's prompting sellers, prospective owners, and just about everyone else to wonder if they could even (gasp!) be heading down.
But hold your horses! Just because the rate of price acceleration is starting to slow nationally, that doesn’t mean every market is pumping the brakes or moving in reverse. There are a few places where home price growth isn’t just edging up, it's actually growing at an accelerated rate, putting fat profits into the pockets of sellers. And here's the thing: They're not those ultrapricey, usual suspects like New York, San Fransisco, or Seattle.
So where are these booming outlier metros? The realtor.com® data team took a deep dive into our listings to find the American housing markets where home prices are growing at the fastest clip.
There are a couple of different things spurring the growth in these unexpected go-go metros. Some, tethered mostly to one industry, have gone through plenty of boom and bust cycles—and are currently at the top of a boom. Others are still-affordable places located near ultraexpensive cities, enjoying an influx of buyers seeking relief from high costs. Most are places that fell so far in the housing crash that they still have more room to grow.
“As other markets are starting to level off a bit or go down, some are playing catch-up from a bump in the road,” says Joseph Kirchner, senior economist at realtor.com.
To come up with our findings, our data team analyzed the increase in median list prices on realtor.com from September 2017 to September 2018 in the nation's 300 largest metropolitan areas.* Then we ranked the places that saw the biggest percentage change in home prices during that span. We limited our list to just two metros per state to ensure some geographic diversity.
So where are America's new boomtowns?
1. Odessa, TX
Median list price: $271,400
One-year change: 34.4%
A combination of rebounding gas prices, improved extraction technology, and a remarkable shale boom in the oil-rich Permian basin in West Texas has pushed the Odessa job market to new heights. (The jobless rate in this region is just 2.7%, a full percentage point lower than the national average.) In fact, global business research firm IHS Markit projects that the region will soon produce more oil than anywhere outside Saudi Arabia and Russia.
While everything seems great now, things weren't always so rosy—the downside to an oil-based economy is that the city pingpongs between up and down economic cycles. From 2014 to 2016, the price of a barrel of crude oil ped from above $100 to under $30. But in the years since, oil prices have rebounded, hovering around $70, and Odessa is back on top. And it seems destined to stay there for a while.
With all the engineers, truckers, and welders moving here, the number of homes on the market has plummeted by 44% over the past 12 months, which is pushing prices ever higher. Those Texas-sized, four-bedroom ramblers so common to this area don't stay available for long.
'There simply aren't enough homes now,' says Reneé Earls, CEO and president of the Odessa Chamber of Commerce.
Median list price: $140,000
One-year change: 27.2%
A couple of hours northwest of Dallas, the streets in Wichita Falls are lined with classic ranch homes with two-door garages—catnip for young families, retirees, and military veterans who served at the Sheppard Air Force Base in the city. Affordability plays a big role: Many of these places are still under $150,000.
Not long ago, the housing market in Wichita was in trouble. Buyers backed off in a big way in 2013 when the region was hit by a severe drought that depleted much of its drinking water, says Henry Florsheim, president and CEO of the Wichita Falls Chamber of Commerce & Industry.
But 'in the spring of 2015 it rained so much that our lakes completely filled [back] up,' Florsheim says. And the housing market has been on a tear ever since as it dovetailed with a stronger job market. That includes the $55 million expansion of the manufacturing plant owned by Vitro Architectural Glass in 2017.
Fun fact: The self-proclaimed 'world's littlest skyscraper' is located in Wichita Falls. Built in 1919, the Newby-McMahon Building was supposed to have been a high-rise in the city's downtown. But investors (who forked over $200,000) didn't realize the blueprints listed its measurements in inches instead of feet, leading to construction of a 40-feet-tall, 18-feet-deep, and 10-feet-wide building. It's now used as an antiques store.
Median list price: $225,100
One-year change: 22.1%
As soon as the first snow falls, Northeastern boomers grab their sunglasses and bathing suits and take off for Homosassa. They aren't the only warmth-seeking creatures. Hundreds of manatees leave the cold waters of the Gulf of Mexico and swim up rivers and into lakes throughout the region.
Just over an hour north of Tampa, Homosassa isn't packed with sprawling retirement communities and big-box stores. Instead, it has more of an outdoor vibe with great wildlife parks and kayaking options. As a result, it's become a hub for retirees who want to buy a well-priced home with some property and woods.
'This is one of the most affordable counties to buy in Florida,' says local broker/owner Kevin Cunningham of Re/Max Realty One. Homosassa Springs is part of Citrus County.
But it isn't just transplanted empty nesters driving up prices. The region's economy is finally growing after undergoing a rough patch—employers are finally hiring again, including Duke Energy, which is nearing the completion of a $1.5 billion natural gas plant on Crystal River.
Median list price: $109,600
One-year change: 21.8%
Like many blue-collar towns in the Midwest, Terre Hauta was pummeled by the last downturn. Manufacturing plants sat idle. Construction workers took pink slips. And while the national unemployment rate didn't top double digits, in Terre Haute it peaked at 12.5%.
'The reason why our home prices are going up is because we’re still recovering from the housing bubble,' says Cy Marlow, managing broker at L.J. Michaels Real Estate in Terre Haute. 'Our baseline was much lower than the rest of the country, and we’re still catching up.'
Home to Indiana State University, Terre Haute has a steady flow of college students moving to the region. And with homes so affordable, their parents will often buy them a home to live in while they're in school. Lucky students! The mortgage on older, two-story homes priced between $50,000 to $80,000 is lower than what it can cost to live in a dorm.
Median list price: $140,000
One-year change: 20.9%
In the heart of the Rust Belt, Battle Creek has a heavy industrial presence, with employers like DENSO Manufacturing Michigan, an automotive parts maker with a 1.4 million-square-foot campus in the region. With American manufacturers posting good numbers, Battle Creek is looking good for the foreseeable future and seeing more folks snapping up homes.
It's not all work and no play in this outdoorsy town just over an hour away from Lake Michigan. Those who aren't afraid of heights can take a hot air balloon ride at Altitude Endeavors. And while they're up there, they'll see neighborhoods that are packed with ranch-style and traditional two-story homes priced below $200,000.
Median list price: $260,000
One-year change: 20.9%
Bowling Green's price hikes are due in no small part to nearby Nashville, TN, becoming more and more unaffordable. With the median home price in the country music capital hovering around $350,000 these days, Bowling Green has emerged as a strong alternative. Here buyers have their pick of two-story, traditional homes with an acre or two for around $250,000.
The city is also close to the Mammoth Cave National Park, the longest cave system in the world. (It was also famously cited by counselor to the president Kellyanne Conway as the site of the 'Bowling Green massacre.' Two Iraqi refugees had been arrested there on charges of trying to send weapons and money to al-Qaida in 2011. But there was no massacre.)
'Bowling Green has a lot of job opportunity, ranging from Western Kentucky University to Fruit of the Loom, which is headquartered here,' says Hank Wilson, a local real estate agent with Crye Leike Executive Realty. 'These are jobs that aren’t going anywhere.'
But the number of homes on the market isn't keeping up with the demand.
'They’re developing new neighborhoods, but construction isn’t going up quick enough for the number of people interested in moving in,' Wilson says.
Median list price: $245,100
One-year change: 20.7%
All of the engineers and tech firms that have moved to Durham, home to Research Triangle Park, are pushing home prices there out of reach for a lot of folks. To cut that mortgage payment down, many folks in Durham are heading 30 minutes west to Burlington, where finding a two-story, four-bedroom home in the suburbs for under $230,000 is still possible. That sure beats the $356,800 median list price in Durham. Yet prices here are rising fast.
Even if many homeowners commute to Durham or even the state capital of Raleigh (about an hour away), they shouldn't discount the local job market in Burlington, a former textile hub that was once known as the 'Hosiery Center of the South.' If you've ever had to take a drug test for a new job, you've likely encountered LabCorp, a network of laboratories and a S&P 500 company headquartered here.
And new residents shouldn't forget to pack their hiking boots. A local go-to is Cedarock Park, a 500-acre park at the foothills of the Cane Mountain Range.
Median list price: $335,100
Some places pride themselves on everyone knowing each other's names. Not in Boise. With all of the new residents moving in, there are just too many new faces to keep up. Last year Idaho had the largest percentage surge in population the nation, at 12.2% from July 1, 2016, to July 1, 2017, with much of the growth happening in Boise.
A number of folks in high-cost states like Oregon and Washington are crossing state lines to save some money. (The median prices in the states are $400,000 and $425,000 respectively and just $329,900 in Idaho.) They love Boise's beautiful Western vistas plus perks like the Gene Harris Jazz Festival each spring and kayaking on the Boise River.
The increase in home prices might be even higher if it weren't for the huge building boom: About 1 in 4 homes listed on realtor.com in Boise City was built within the past year. These new homes, often with fenced-in backyards and huge walk-in closets, are being built in sprawling subdivisions. Many of these new homes cost under $300,000—something you can't find in Seattle.
Median list price: $330,000
A decade ago, many neighborhoods in Las Vegas were lined with foreclosed homes, making the city a poster child for the housing bubble. But things are looking up in Sin City. A combo of an improved tourist economy, younger buyers hitting the market, and an influx of folks from high-cost places in California is driving up home prices again.
“Millennials [in Las Vegas] have found real estate can be a great investment. When they graduated high school or college, they saw their parents losing a lot in real estate here,” says Charles Profeta, broker/owner of Engel & Völkers Henderson. 'But as they're getting into the meat of their careers and making good money, they’re starting to buy homes.'
Many of these younger folks are grabbing two-bedrooms condos and townhomes priced below $200,000 in neighborhoods such as Spring Valley, which has a suburban feel but is just a short drive into downtown.
Las Vegas is way more than just tourism these days, with companies such as Zappos.com, an online retailer, growing like crazy. That's a good thing for the long-term prospects of its real estate market, since vacations are the first thing people stop spending money on when a recession rears its ugly head.
10. Indianapolis, IN
Median list price: $250,100
One-year change: 16.4%
Over the past few years, more millennials have been flocking to Indianapolis, attracted to the good jobs at companies like drug maker Eli Lilly and business software titan Salesforce. And they stay for the lifestyle and cheap real estate.
'What’s driving up the prices is the big influx of people moving in,' says Stacy Barry, a local real estate agent at Century 21 Scheetz. 'Over the last few years we’ve started to explode.'
And unlike in many parts of the country, millennials are able to afford to become homeowners, with choices from townhomes near downtown, which is dotted with skyscrapers that are home to large publicly traded companies, to single-family homes in walkable suburbs like Carmel and Fishers. And all that demand is causing inventory to tighten. In fact, Indianapolis has seen the third-biggest in inventory among the largest markets in the country.
'I just represented a new builder who created a community of townhomes. They ran for about $300,000 to $350,000, and the entire community sold out in eight months,' Barry says.
* A metropolitan statistical area is a designation that includes the urban core of a city and surrounding smaller towns and cities.
Allison Underhill contributed to this report.
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