October 26, 2016

Places Most Likely to Overachieve in 2016

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Places Most Likely to Overachieve in 2016

The national housing market is largely predicted to make gains in 2016, mostly due to a sizable pent-up demand for home buying, Lawrence Yun, the chief economist for the National Association of REALTORS®, notes in his latest column at Rising mortgage rates and fragile economic conditions persist but added jobs and the likelihood of looser underwriting standards are expected to help “propel the housing market forward” this year, Yun notes.

Read more: 3 Buyer Types to Watch for in 2016

Some housing markets will fare better than others, particularly those with strong job growth.  As such, Yun predicts the top performers for rising home sales and prices will be cities in the West and in the South this year. However, in the Midwest, Yun predicts Grand Rapids, Mich., will outshine the rest.

Yun notes that his picks for markets that will likely outperform the others in 2016 don’t just have strong job markets but they also boast relatively affordable home prices. Yun pinpoints the following markets as likely outperformers in housing in 2016:

  • Grand Rapids, Mich.: 3.70% (12-month job growth rate; compared to 1.9% nationwide)
  • Riverside, Calif.: 3.50%
  • Salt Lake City, Utah: 3.50%
  • Atlanta, Ga.: 3.40%
  • Charlotte, N.C.: 3.30%
  • Portland, Ore.: 3.30%
  • Tampa-St. Petersburg-Clearwater, Fla.: 3.30%
  • Providence, R.I.: 2.10%

“There are other markets with similar or even faster job growth rates, but the very high home prices in these areas could deter buyers and thereby dampen home buying,” Yun notes. “San Jose with a 5.1 percent job growth rate and Austin with a 3.9 percent growth rate are prime examples where job gains may not necessarily translate into more home buying activity because of affordability issues.”

Yun predicts that in 2016 the markets that will suffer the most will be those posting job losses. “Currently, due to the oil and coal price collapses, Louisiana, North Dakota, Oklahoma, West Virginia, and Wyoming are the only states with fewer jobs now versus one year ago,” Yun writes. “In addition, some small manufacturing towns hit by the stronger dollar, and thereby less able to compete with cheaper foreign produced products, could also feel the pinch. Namely, Allentown-Bethlehem, Pa.; Dubuque, Iowa; Peoria, Ill.; and Roanoke, Va., have very affordable homes but prices could still buckle as people leave for jobs elsewhere.”

Source: “The U.S. Cities Whose Housing Markets Are Likely to Outperform and Underperform in 2016,” Forbes (Jan. 7, 2016)